Indian Journal of Economics and Development

Open Access Open Access  Restricted Access Subscription Access

An Empirical Study on the Role of MUDRA Yojana in Financing Micro Enterprises


Affiliations
1 Department of Commerce, Aligarh Muslim University, Aligarh-202002, India
 

Background/Objectives: To analyse the performance of Micro Unit Development and Refinance Agency (MUDRA) Yojana, an initiative of Government of India to escalate the micro enterprises.

Methods/Statistical Analysis: The data related to MUDRA Yojana mainly sourced from annual reports of MUDRA Yojan and its website, data also have taken from various journal, magazine and periodical, etc. The study has analyzed various credit schemes, and their performances. To achieve objective of the study relevant comparisons have done among schemes, regions, financial institutions, total credit and numbers of accounts by employing statistical tools such descriptive, percentage and ANOVA.

Findings: The specific or more specialised financial institution for serving the credit need of the micro enterprises including SMEs is the need of the hour. The government initiative to escalate micro enterprises by providing financial support through MUDRA Yojana is a successful venture. The growth rate of accounts opening and credit disbursement in various MUDRA Schemes shows positive trend. The scheme has reached widely among marginalised segments, 73.41% of account holders are women and 25.16% are new entrepreneurs. However the northern states of the country show comparatively lesser participation in both creations of accounts as well as sourcing of credit. Majority of accounts are opened under ‘shishu’ scheme and participation Tarun Scheme (Major Projects) is less. The participation of RRBs and PSBs in the scheme is insignificant than private banks, which is not a favourable trend in long run.

Improvements/Applications: Government initiative for financing micro enterprises is moving in a balanced direction, the government should improve the bracket of beneficiaries as well as focus on quality of the credit rather than quantity of the credit.


Keywords

MUDRA Yojana, Micro Enterprises, Financial Assistances, Marginalised Groups.
User
Notifications

  • H. Dinh, Dimitris Mavridis, Hoa Nguyen. The binding constraint on firms’ growth in developing countries. World Bank, Washington, DC Policy Research Working Paper 5485. 2010.

  • T. Beck, A. Demirguc-Kunt, V. Maksimovich. Financing and legal constraints to firm growth: does size matter? World Bank, Washington DC. Policy Research Working Paper No. 2784. 2002.

  • M. Malhotra,Y. Chen, A. Criscuolo, Q. Fan, I.I. Hamel, Y. Savchenko. Expanding access to finance: good practices and policies for micro, small and medium enterprises. Washington DC: World Bank Institute. 2007; 1-122.

  • T. Tambunan. SME development, economic growth, and government intervention in a developing economy: the Indonesian story. Journal of International Entrepreneurship. 2008; 6(4), 147-167.

  • Constraints to growth and employment in the informal sector: evidence from the 1999 informal survey. https://openknowledge.worldbank.org/bitstream/handle/10986/15388/multi0page.pdf? Sequence=1&isAllowed=y. Date accessed: 06/2002.

  • C. Skinner. Constraints to growth and employment in Durban: evidence from the informal economy. School of Development Studies, University of KwaZulu-Natal, Durban. Research Report No. 65. 2005; 1-54.

  • A.N. Berger, G.F. Udell. The economics of small business finance: the roles of private equity and debt markets in the financial growth cycle. Journal of Banking and Finance, No. 22. 1998; 22(6-8), 613-73.

  • M. Fafchamps. Trade credit in Zimbabwean manufacturing. In World Development. 1997; 25(5), 795-815.

  • A. Barajas, Roberto Steiner. Credit stagnation in Latin America. International Monetary Fund. Working Paper, No. 02/53. 2002; 1-49.

  • D. Bhattacharya, N. Faiz, S. Zohir. Policy for employment generation in the informal sector of Bangladesh e a study prepared for the international labour office. Dhaka: Centre for Policy Dialogue. 2000.

  • G. Clarke, D. Kaplan, V. Ramachandran. The investment climate for micro-enterprises in South Africa, Paper presented at the TIPS Conference on Accelerated and Shared Growth in South Africa: Determinants, Constraints and Opportunities. 2006.

  • South Africa: Enhancing the effectiveness of government in promoting micro, small and medium enterprise. http://documents.worldbank.org/curated/en/458771468104634792/South-Africa-Enhancing-the-effectiveness-of-government-in-promoting-mcro-small-and-medium-enterprise. Date accessed: 14/02/2007.

  • T. Beck, Aslı Demirgüç-Kunt, Maria Soledad Martinez Peria. Bank financing for SMEs around the world: drivers, obstacles, business models, and lending practices. World Bank, Washington, DC Research Working Paper 4785.2008; 1-43.

  • R. Lucas. On the mechanics of economic development. Journal of Monetary Economics, 1988; 22(1).

  • Chandavarkar, Anand. Of finance and development: neglected and unsettled questions. World Development. 1992; 20(1), 1-40.

  • B. Rogaly. Micro-finance evangelism, “destitute women” and the hard selling of a new anti-poverty formula. Development in Practice. 1996; 6, 100-112.

  • J. Morduch. The microfinance promise. Journal of Economic Literature. 1999; 37, 1569-1614.

  • J. Remenyi. Where credit is due: income-generating programmes for the poor in developing countries. Intermediate Technology Publications, London. 1991; 1-175.

  • R. Christen, E. Rhyne, R. Vogel. Maximising the outreach of microenterprise finance: the emerging lessons of successful programs. USAID, Washington DC.1995.

  • Sirri, Erik R, Peter Tufano. The economics of pooling: the global financial system: a functional perspective. Dwight B. Crane and others (eds.), Boston, Harvard Business School Press. 1995.

  • International finance corporation (IFC) Job study. https://www.ifc.org/wps/wcm/connect/0fe6e2804e2c0a8f8d3bad7a9dd66321/IFC_FULL+JOB+STUDY+REPORT_JAN2013_FINAL.pdf?MOD=AJPERES. Date accessed: 01/2013.

  • MUDRA Banks credit details. https://www.financialexpress.com/about/mudra-bank/. Date accessed: 30/09/2018.


Abstract Views: 370

PDF Views: 474




  • An Empirical Study on the Role of MUDRA Yojana in Financing Micro Enterprises

Abstract Views: 370  |  PDF Views: 474

Authors

P. A. Ibrahim
Department of Commerce, Aligarh Muslim University, Aligarh-202002, India

Abstract


Background/Objectives: To analyse the performance of Micro Unit Development and Refinance Agency (MUDRA) Yojana, an initiative of Government of India to escalate the micro enterprises.

Methods/Statistical Analysis: The data related to MUDRA Yojana mainly sourced from annual reports of MUDRA Yojan and its website, data also have taken from various journal, magazine and periodical, etc. The study has analyzed various credit schemes, and their performances. To achieve objective of the study relevant comparisons have done among schemes, regions, financial institutions, total credit and numbers of accounts by employing statistical tools such descriptive, percentage and ANOVA.

Findings: The specific or more specialised financial institution for serving the credit need of the micro enterprises including SMEs is the need of the hour. The government initiative to escalate micro enterprises by providing financial support through MUDRA Yojana is a successful venture. The growth rate of accounts opening and credit disbursement in various MUDRA Schemes shows positive trend. The scheme has reached widely among marginalised segments, 73.41% of account holders are women and 25.16% are new entrepreneurs. However the northern states of the country show comparatively lesser participation in both creations of accounts as well as sourcing of credit. Majority of accounts are opened under ‘shishu’ scheme and participation Tarun Scheme (Major Projects) is less. The participation of RRBs and PSBs in the scheme is insignificant than private banks, which is not a favourable trend in long run.

Improvements/Applications: Government initiative for financing micro enterprises is moving in a balanced direction, the government should improve the bracket of beneficiaries as well as focus on quality of the credit rather than quantity of the credit.


Keywords


MUDRA Yojana, Micro Enterprises, Financial Assistances, Marginalised Groups.

References