The Union Cabinet has approved creation of a Credit Guarantee Fund (CGF) for Micro Units Development Refinance Agency (MUDRA) loans. into MUDRA Small Industries Development Bank of India (SIDBI) Bank as a wholly owned subsidiary of SIDBI. The Fund is expected to guarantee more than Rs 1,00,000 crore worth of loans to micro and small units in the first instance.
Features of scheme
- Credit Guarantee Fund for MUDRA Units (CGFMU) will guarantee loans sanctioned under Pradhan Mantri Mudra Yojana (PMMY) to reduce the credit risk to Banks and other financial intermediaries who are Member Lending Institutions (MLIs).
- National Credit Guarantee Trustee Company NCGTC Ltd will manage and operate various credit guarantee funds and shall be the Trustee of the
- NCFTC will be a wholly-owned company of Union Government and shall be constituted under the Companies Act, 1956 (2013).
- Under this scheme the guarantee would be provided on portfolio basis to a maximum extent of 50 per cent of Amount in Default in the
MUDRA Bank
- 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 as per the Budget Speech for 2015-16.
- As a precursor to the launch of the Pradhan Mantri MUDRA Yojana (PMMY) in April, 2015, MUDRA Ltd. was set up as a corporate subsidiary of SIDBI in March, 2015.
- The RBI has allocated Rs 20,000 crore and the first tranche’ of Rs 5000 crore has been received by MUDRA as refinance.