An Analysis of Pan-India Financial Intermediation Accomplished through the Implementation of Pradhan Mantri Mudra Yojana (PMMY) - Literature Review

Abstract

Purpose: A vast part of the non-corporate sector operates as unregistered enterprises. They do not maintain proper books of accounts and are not formally covered under taxation areas. Therefore, the banks find it difficult to lend to them. The majority of this sector does not access outside sources of finance. It is in this backdrop that the Government of India (GOI) is setting up a Micro Units Development & Refinance Agency (MUDRA) Bank through a statutory enactment. This Agency would be responsible for developing and refinancing all Micro-finance Institutions (MFIs) which are in the business of lending to micro / small business entities engaged in manufacturing, trading and service activities. The bank would partner with state-level / regional level coordinators to provide finance to Last Mile Financiers of small/micro business enterprises. Since the enactment is likely to take some time, it is proposed to initiate MUDRA as a unit of SIDBI to benefit from SIDBI’s initiatives and expertise. Objective: The main objective of the literature survey is to examine the impact of MUDRA Yojana on new start-ups and employment opportunities. Design/Methodology: The study report relies on secondary data gathered from a wide range of areas, including websites and published publications. Following the review of the study and their area gap in the literature, the potential to examine the function of MUDRA in developing small scale industries and small and medium enterprises. Finding/Result: The study shows that PMMY needs to have more control over the fixation of Interest rate. In the study, we can understand that people from backward castes are still not accessing the MUDRA Yojana. The study shows that MUDRA Yojana is providing the fund but not giving Skill oriented training sessions for new entrepreneurs. Originality/Value: This study was conducted to determine the contributions of MUDRA financing in terms of operating capital to small scale Industry to create Job opportunities in rural and urban areas. Paper type: A literature review.