MUDRA Bill to be in Parliament within 6-12 months
New Delhi: A legislation on MUDRA Bank is expected to be introduced in Parliament within a year and it will incorporate provisions of the Micro Finance Institutions Bill that was prepared by the previous government, the Finance Ministry said today.
The MUDRA Bill will seek to create a financial institution for providing funding to 5.77 crore micro and small business entities engaged in manufacturing, trading and services.
The roles envisaged for MUDRA Bank include laying down policy guidelines for micro enterprise financing business as well as registration of MFIs, their accreditation and rating.
Speaking on the launch of Pradhan Mantri MUDRA Yojana, Financial Services Secretary Hasmukh Adhia said there will not be a separate bill on MFIs as many components of that would be incorporated in the proposed MUDRA Bill.
Asked if there is a plan to merge old MFI Bill into MUDRA Bill, he said, “some components of MFI Bill will definitely come to MUDRA Bill”.
So, there will not be a separate MFI Bill, Adhia said, adding that “it will be a part of MUDRA Bill… It will be tabled in Parliament in the next 6 months to one year”.
On a question if MUDRA would regulate the NBFC (MFI), Adhia said, “That decision would be taken when the Bill will be framed.”
On whether MUDRA, a subsidiary of SIDBI registered as NBFC, would be transformed into a universal bank, he said the government is yet to firm up idea on this.
“Government can decide to make it as policy bank like NHB or it can decide to make it universal bank,” he said.
Speaking about the broad contours of the proposed Bill he said, “it will define what is going to be the MFI. What is our definition of MFI. It will try and put in some process of registering new MFIs with MUDRA Bank.”
It will also define functioning and objective of MUDRA Bank, Adhia said, adding that “it will also put in place entire mechanism as to how much interest rate can be charged for micro sector etc”.
Speaking of the initiative launched today by the Prime Minister Narendra Modi, Adhia said MUDRA has been registered as company and an NBFC under RBI. It will become a statutory body after the bill on this is passed by Parliament.
For now, he said, the government has “already appointed the CEO of this institution. One of the Chief General Managers of Narbard Jiji Memon has been appointed CEO of the institution. Even the board is in the place and CEO is in place so the functioning would start from today”.
The institution has started the refinancing activity at 7 per cent interest rate, he said.