RBI HAS FAILED FINANCIAL ACCESS TO SMALL BUSINESSES IN THE COUNTRY

MUDRA IS A GAME CHANGER  & NEEDS LAW FAST-CAIT TELLS JAITLEY

The Confederation of All India Traders (CAIT) has urged the Union Finance Minister Mr. Arun Jaitley to free Mudra from the clutches of Reserve Bank of India by passing a legislation in Parliament and to make Mudra as an independent regulator to lend finance to existing financial eco-system catering to the needs of non corporate sector. Such a step will be in accordance with the resolution of the Union Cabinet and "funding for unfunded" declaration of Prime Minister Mr. Narendra Modi. The RBI has failed to deliver requisite finances to small businesses in the Country-charged CAIT.

Micro Units Development and Refinance Agency (MUDRA) was formed by the Government to facilitate easy finance to last mile financiers which in turn will lend to actual borrowers since only 4% of non corporate sector could able to obtain finances from core banking sector-said CAIT National President Mr. B.C.Bhartia & Secretary General Mr. Praveen Khandelwal. 

It is a landmark initiative of the Prime Minister Mr. Modi taken for the first time by any Government in past 68 years post Indepenndence but for obvious reasons the Mudra loans are being disbursed by Commercial banks instead of other financial institutions as originally conceived by the Government while launching Mudra. The colonial mind set of the Banks and stringent conditions is debarring the actual beneficiary in obtaining Mudra loans. 

Both Mr. Bhartia & Mr. Khandelwal express dismay over the delay in drafting a law for Mudra. About four months back a draft for Mudra was circulated in the core group set up by the Government to draft legislation and certain amendments were suggested. Unfortunately since then no second meeting has taken place which is worrying the traders-said trade leaders.

As per original planning, the Mudra needs to be at the top of a pyramid having different set of financial institutions in lower verticals of pyramid. The funds will flow from Mudra to existing Non Banking Finance Companies, Micro Finance Institutions, Trust, Societies etc which will lend to Last Mile Financiers, the existing actual lenders who will be lending to borrowers and in this way it will accomplish the tag line of Mudra "funding for unfunded".

Both Mr. Bhartia & Mr. Khandelwal said that there is a strong need to provide access to finance to a large section of the economy. The economic activities generated through Mudra loans can have their own contribution to the GDP growth he said.

An Action Committee for Formal Finance For Non Corporate Small Businesses a group of about 70 leading national Associations of different verticals of non corporate sector having Confederation of All India Traders in forefrunt has made a strong public advocacy for bringing Mudra.