Mudra Loan for ST, SC, and OBC under the Stand up India Scheme:
The Pradhan Mantri Mudra Yojana scheme was launched by the Union Government of India via an institution known as the MUDRA Bank or the Micro Units Development and Refinance Agency Limited. The aim of this agency is to help non-farm, non-corporate sectors to access financial loans to aid small and micro businesses that are engaged in generating income. In the typical economic settings, the small businesses in the nation are disadvantaged in that they cannot be able to access funding in form of loans from traditional banks. This is because they lack the finances to repay the interest rates or they don’t qualify for the funds.
The Pradhan Mantri Mudra Yojana doesn’t just facilitate loan facilities for micro enterprises; it also works out frameworks to ensure that the borrowers learn how to minimize risks and losses in their business to allow them, able to repay back the loan. A new scheme has been put in place and it is dubbed Stand up India. This financial lending scheme for small businesses aims at offering loans for ST, SC, and women.
The Stand up India lending scheme has key features that make the loan products to micro businesses and starts very cost effective. For example:
- There are not collaterals necessary to be granted a loan
- Borrowers can enjoy zero loan processing fee
- Borrowers pay a 1 percent rate of interest per month that translates to about a 12 percent interest rate per annum.
- The maximum period to pay off the loan runs up to 5 years to reduce the burden of paying back the loan
- MUDRA cards help provide working capital credit facilities for the borrowers.
For the businesses or entrepreneurs that belong to ST, SC, and OBC, they have been given added benefits and perks to ease their borrowing needs. For example:
- The borrowers need to provide proof of identity that is self attested and it may include driving license, voter card, AADHAR card, or a passport
- They provide residential proof that may include water bills, electricity bills, bank statement, passport, or a recent telephone bill
- The borrowers need to provide 2 copies of passport size photos
- They also should provide ownership identify of a business like a certificate of license
- If they need to purchase machinery or other items to help with their business, they can provide lump-sum quotations for example, for machinery. The details of the machinery including the supplier’s name, the cost of the machinery, items that need to be purchased and other details should be provided by the borrower.
- Yet important, the borrowers should provide a certificate of proof in regard to OBC, ST or SC.
The government takes some responsibility together with the borrower when advancing loans to the lenders. That’s why you find that even lenders that don’t provide proof of getting returns from the loans may still be able to get the loans. The government and the lender have a 50-50 liability to the credit facility offered to the borrower. The government offers a subsidy to those taking the loans that they are able to repay the interest charged over the tenure period.