Micro Units Development and Refinance Agency Bank (or MUDRA Bank)

  • Is a public sector financial institution in India.
  • Provides loans at low rates to micro-finance institutions and non-banking financial institutions which then provide credit to MSMEs.
  • Launched by Prime Minister Narendra Modi on 8 April 2015


The formation of the agency was initially announced in the 2015 Union budget of India in February 2015. It was formally launched on 8 April.

The MUDRA banks were set up under the Pradhan Mantri MUDRA Yojana scheme. It will provide its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.

The bank will have an initial capital of ₹200 billion (US$3.1 billion) and a credit guarantee fund of ₹30 billion (US$460 million). The bank will initially function as a non-banking financial company and a subsidiary of the Small Industries Development Bank of India (SIDBI). Later, it will be made into a separate company. However, it will regulate Micro Finance institutions.



Function Of MUDRA Bank

  • It will provide funds to Non-corporate small business sector.
  • It will also partner with State/Regional level nancial intermediaries to provide nanceto small/micro business enterprise

The bank will classify its clients into three categories and the maximum allowed loan sums will be based on the category:

Shishu : Allowed loans up to ₹50,000 
Kishore : Allowed loans up to ₹5 lakh
Tarun : Allowed loans up to ₹10 lakh 

Those eligible to borrow from MUDRA bank are:-

  • Small manufacturing unit
  • Shopkeepers
  • Fruit and vegetable vendors
  • Artisans

The basic criteria of age should be 18 years old.



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