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MUDRA: The Transformation of Microfinance in India: Review, Experiences and Future Prospect

  • Manas RoyEmail author
Chapter

Abstract

The Government of India has recently launched a range of macroeconomic policy initiatives which are innovative as well as transforming also. Launching of Micro Units Development and Refinance Agency (MUDRA) bank on 8th April, 2015 with an aim to look forward to the development of small entrepreneurs is one of them. The main objective of this initiative is to empower Non-Corporate Small Business Sector (NCSBS), fulfil the financial needs of approximately 5.77 Crore small businesses spreading throughout the country as well as to create as many microfinance institutions (MFIs) as possible. Crossing the main objective of microfinance, the MUDRA BANK is targeting Funding the unfunded as a Last Mile Financiers. In most of the developing countries, financing to the poor through formal financial services failed to meet the requirements. The high risk as well as high transaction costs associated with small loans and savings deposits are the factors which make them vulnerable. It is also estimated that in developing countries, the formal financial system reaches on an average to only top 25% of the economically active population and leaves the bottom 75% without access to financial services. India is not an exception on this front. GOI through this initiative has indicated to lend a loan up to Rupees 10 lakh in three categories, viz, Shishu, Kishor and Tarun through MUDRA Bank. The National Bank for Agriculture and Rural Development (NABARD) will closely monitor the progress of this policy. If implemented in right spirit, this policy initiative has the power to bring revolutionary changes in the Indian economy. This study tries to find out what is new in this initiative and its future prospect after initiation.

Keywords

Microfinance MUDRA NABARD PMMY 

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Copyright information

© Springer Nature Singapore Pte Ltd. 2018

Authors and Affiliations

  1. 1.Faculty of Arts and Law, Department of Economics, School of Humanities & Social SciencesManipal University JaipurJaipurIndia

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