Bill for MUDRA Bank to be in Parliament within 12 mths: Adhia

The Rs 20,000-crore MUDRA Yojana, launched by Prime Minister Narendra Modi today to fund the "unfunded" with micro-lending of up to Rs 10 lakh, may be converted into a bank in next 12 months with passage of a bill in this regard in Parliament.
The MUDRA Bill will seek to create a financial institution for providing collateral-free funding to 5.77 crore micro and small business entities engaged in manufacturing, trading and services.
The roles envisaged for the proposed MUDRA (Micro Units Development and Refinance Agency) Bank include laying down policy guidelines for micro enterprise financing business as well as registration of MFIs, their accreditation and rating.

Speaking at the launch of Pradhan Mantri MUDRA Yojana, Financial Services Secretary Hasmukh Adhia said there will not be a separate bill on MFIs as many components of that would be incorporated in the proposed MUDRA Bill.
Asked if there is a plan to merge old MFI Bill into MUDRA Bill, he said, "Some components of MFI Bill will definitely come to MUDRA Bill".
So, there will not be a separate MFI Bill, Adhia said, adding that "it will be a part of MUDRA Bill... It will be tabled in Parliament in the next 6 months to one year".

On a question if MUDRA would regulate the NBFC (MFI), Adhia said, "That decision would be taken when the Bill will be framed."

On whether MUDRA, a subsidiary of SIDBI registered as NBFC, would be transformed into a universal bank, he said the government is yet to firm up idea on this.
"Government can decide to make it as policy bank like NHB or it can decide to make it universal bank," he said.
Speaking about the broad contours of the proposed bill, he said, "It will define what is going to be the MFI. What is our definition of MFI. It will try and put in some process of registering new MFIs with MUDRA Bank."
It will also define functioning and objective of MUDRA Bank, Adhia said, adding that "it will also put in place entire mechanism as to how much interest rate can be charged for micro sector etc".

Soon after the launch, Modi said MUDRA scheme is aimed at "funding the unfunded". "The established financial systems will soon move to the MUDRA-model of functioning, i.E. To support entrepreneurs that give employment to a large number of people using least amount of funds."
He expressed confidence that within a year, banks would queue up to give loans to MUDRA applicants.
In his Budget speech, Finance Minister Arun Jaitley had proposed MUDRA with a corpus of Rs 20,000 crore, and credit guarantee corpus of Rs 3,000 crore.