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CS Professional · Banking and Insurance - Laws and Practice · Various Government Schemes

A bank officer is advising Sunita on loans under MUDRA. Which statement about collateral and the nature of MUDRA is correct?

MUDRA loans to non-corporate, non-farm micro and small enterprises carry no collateral requirement, and MUDRA acts as a refinancing agency for banks, NBFCs and microfinance institutions instead of lending directly. It is not limited to companies or to crop cultivation.

  1. AMUDRA loans to non-corporate, non-farm small and micro enterprises are collateral-free, and MUDRA itself refinances lenders rather than lending directly to borrowersCorrect
  2. BMUDRA lends directly to individual borrowers through its own branches and requires property as collateral
  3. CMUDRA loans are available only to registered public limited companies
  4. DMUDRA loans are meant only for crop cultivation by farmers

Explanation

PMMY loans to non-corporate, non-farm micro and small enterprises are collateral-free, and MUDRA works as a refinance agency supporting banks, NBFCs and MFIs that lend to borrowers. The claim of direct lending with collateral is therefore wrong, as is limiting it to companies or crop loans.

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