A three-way collaboration between the Indian government, lending institutions and aggregators aims to enable widen the reach of Mudra Yojana, the government’s flagship scheme that funds micro-entrepreneurs who don’t have access to formal sources of credit.
Nearly 40 institutions attended a seminar organised by the Finance Ministry today to discuss this collaboration, which the government hopes will enable it to tap into the massive outreach that some of some of them enjoy.
Loans disbursed under the Mudra scheme this year will focus on the network anchored by aggregators such as Oyo, Uber and Ola; service providers such as Swiggy and Zomato; fast moving consumer goods companies like Amul and Patanjali; oil marketing companies Indian Oil Corporation Ltd. and Bharat Petroleum Corporation Ltd.; online retailers Amazon and Big Basket; and associations such as the Mumbai Dabbawalas.
Banking Secretary Rajeev Kumar said that with support from the aggregators, loans can be easily disbursed to their employees or ancillaries. Lenders will be able to provide credit to them as they will be able to better trust the borrowers who are part of the aggregator’s network. The loans given to the entrepreneurs will then be refinanced under the Mudra Yojana.
Applications for loans can be made through the portal, Udayamimitra, or by directly approaching banks. The loans can be for working capital requirements, discounting bills or as term loans. For credit limit of up to Rs 5 lakh, loans can be disbursed within two weeks. For loans ranging from Rs 5 lakh up to Rs 25 lakh, the process would typically take three weeks and six weeks if the credit limit exceeds Rs 25 lakh.
Overruling any concerns regarding the quality of loans disbursed, PS Jayakumar, MD and CEO of the Bank of Baroda said that while each bank has its own norm when lending, they will largely rely on credit scores for loan disbursement under the scheme.
As banks continue to tap into an increasing database and scoring systems become stronger, they will determine the way forward eliminating the need for manual intervention or decision making.PS Jayakumar, MD and CEO, Bank of Baroda