Banks in AP so far disburse Rs 20,000 cr under MUDRA loans

Scheme provides smaller denomination loans with an intention to fund unfunded small businesses upto a limit of Rs 10 lakh

Banks have so far disbursed about Rs 20,000 crore loans under Micro Units Development and Refinance Agency (MUDRA) scheme announced by Prime Minister Narendra Modi last year.

The scheme is designed to provide smaller denomination loans with an intention to fund the unfunded small businesses upto a limit of Rs 10 lakh, through banks.

"A loan disbursal target of Rs 1 lakh crore had bee fixed under the MUDRA scheme this year. Out of this the public sector banks would be granting around Rs 70,000 crore loans," VLVSS Subba Rao, economic advisor, Department of Financial Services, said on Wednesday.

He said a special drive will be conducted between September 25 to October, 2, 2015 for disbursement of MUDRA loans at a large scale. All the banks have been given the targets for this.

Andhra Bank today launched the MUDRA Card, which is essentially a debit card given to the borrower for easy access to finance. These loans are provided with out any collateral security. Till date the bank has sanctioned 23,762 MUDRA loans amounting to Rs 240 crore, according to Andhra Bank managing director S K Kalra.

"The scheme essentially encourages banks to disburse smaller denomination loans. The banks can also avail of the refinance facility on these loans under the MUDRA Yojana,"he said.

However, banks may not find the refinancing facility an attractive proposition at all times because the interest rate charged on refinance facility was often higher compared to a relatively cheaper funds available for the banks, according to Kalra.