Recent Developments like MUDRA Financing and other Social Security Schemes

The Indian financial system has undergone significant transformation in recent years, with a focus on improving financial inclusion, providing social security, and ensuring access to credit for all sections of society. Key developments include the launch of MUDRA financing and various social security schemes aimed at enhancing the financial well-being of individuals and small businesses.

MUDRA Financing

Micro Units Development and Refinance Agency (MUDRA) was launched in April 2015 as part of the Pradhan Mantri MUDRA Yojana (PMMY). Its primary objective is to provide financial assistance to small and micro enterprises, which form the backbone of the Indian economy but often face challenges in accessing formal credit.

Objectives of MUDRA Financing

• To promote entrepreneurship and self-employment by providing affordable credit.
• To ensure access to institutional finance for small businesses and micro-units, particularly in rural and semi-urban areas.
• To reduce the dependence on informal credit channels, which often charge exorbitant interest rates.

Categories of MUDRA Loans

MUDRA loans are classified into three categories based on the business stage and credit requirement:

1. Shishu: Loans up to ₹50,000 for startups and small enterprises in their initial stages.
2. Kishore: Loans ranging from ₹50,001 to ₹5,00,000 for enterprises that have started operations but need additional funding for growth.
3. Tarun: Loans ranging from ₹5,00,001 to ₹10,00,000 for well-established enterprises seeking funds for expansion.

Achievements of MUDRA Yojana

• Since its inception, MUDRA has financed over 37 crore beneficiaries, disbursing more than ₹20 lakh crore in loans.
• The scheme has empowered marginalized sections, particularly women, as a significant portion of loans have been availed by female entrepreneurs.
• MUDRA has contributed significantly to job creation by enabling small businesses to scale up and sustain themselves.

Key Social Security Schemes

Several social security schemes have been launched by the Government of India in collaboration with financial institutions to provide a safety net for vulnerable sections of society. These schemes aim to ensure access to affordable insurance, pension, and health coverage.

a. Pradhan Mantri Jan Dhan Yojana (PMJDY)

Launched in August 2014, PMJDY aims at ensuring universal access to banking facilities and promoting financial literacy. The scheme focuses on providing bank accounts to unbanked individuals, along with access to credit, insurance, and pension services.

• As of 2023, over 50 crore Jan Dhan accounts have been opened.
• The scheme has facilitated direct benefit transfers (DBTs) and improved financial inclusion significantly.

b. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Launched in 2015, PMJJBY is a life insurance scheme offering coverage of ₹2 lakh at a nominal annual premium of ₹330.

• It is aimed at providing financial security to the family in case of the breadwinner’s demise.
• Over 15 crore people have been covered under the scheme as of 2023.

c. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

This accident insurance scheme provides a coverage of ₹2 lakh for accidental death or permanent disability and ₹1 lakh for partial disability. The annual premium is just ₹12, making it highly affordable.

• The scheme has enrolled over 30 crore individuals since its launch in 2015.

d. Atal Pension Yojana (APY)

Launched in 2015, APY aims to provide a guaranteed pension to workers in the unorganized sector. Individuals can contribute to the scheme until the age of 60, and receive a fixed pension ranging from ₹1,000 to ₹5,000 per month.

• The scheme has gained popularity among low-income groups, with over 5 crore subscribers as of 2023.

e. Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PMJAY)

Launched in 2018, PMJAY is the world’s largest government-funded healthcare scheme, providing health insurance coverage of up to ₹5 lakh per family per year.

• The scheme aims to reduce out-of-pocket medical expenses for low-income families and improve access to quality healthcare.
• Over 50 crore beneficiaries have been covered under PMJAY, with thousands of hospitals empaneled.

Stand-Up India Scheme

Launched in 2016, the Stand-Up India Scheme aims to promote entrepreneurship among Scheduled Castes (SCs), Scheduled Tribes (STs), and women by facilitating bank loans between ₹10 lakh and ₹1 crore for setting up greenfield enterprises in the manufacturing, services, or trading sectors.

• As of 2023, the scheme has benefitted over 1.5 lakh entrepreneurs, promoting inclusive growth and job creation.

Financial Literacy and Inclusion Initiatives

In addition to credit and social security schemes, several initiatives have been launched to promote financial literacy and inclusion:

• Rural Self Employment Training Institutes (RSETIs): These institutes provide skill development and training to rural youth to enhance their employability.
• Financial Literacy Centres (FLCs): FLCs have been set up across the country to educate people about financial products, services, and responsible borrowing.
• Digital Banking and Payment Infrastructure: The rise of UPI (Unified Payments Interface), mobile banking, and internet banking has transformed the way financial transactions are conducted, promoting cashless transactions and improving accessibility.