The government said the Credit Guarantee Fund for loans disbursed under the >Pradhan Mantri Micro Units Development Refinance Agency (MUDRA) Yojana would be able to guarantee loans of over Rs.one lakh crore as it gave its approval to convert MUDRA into a bank.
The government expects the fund to be able to guarantee loans worth more than Rs.one lakh crore over the next three years of micro and small units, according to an official statement. In the event of defaults under the scheme, the Fund will safeguard banks and financial institutions.
The Union Cabinet had approved the creation of a Credit Guarantee Fund for >Micro Units Development Refinance Agency (MUDRA) loans and to convert MUDRA Ltd into MUDRA Small Industries Development Bank of India (SIDBI) Bank into a wholly owned subsidiary of SIDBI.
“The MUDRA (SIDBI) Bank will undertake refinance operations and provide support services with focus on portal management; data analysis etc apart from any other activity entrusted or advised by Government of India,” the statement said.
MUDRA Bank and a Credit Guarantee Fund was proposed to be set up with a refinance corpus of Rs.20,000 crore and a corpus of Rs.3,000 crore respectively in the Budget 2015-16.
