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Mudra Bank to be subsidiary of Sidbi

The proposed Mudra Bank, announced by the government in the budget, will initially be set up as a subsidiary of Sidbi. Financial services secretary Hasmukh Adhia said it will later be converted into a full-fledged bank through an act of Parliament. He told a conference that prime minister Narendra Modi will soon launch the bank. Finance minister Arun Jaitley had announced in the budget that Mudra Bank will be set up with a corpus of Rs 20,000 crore and a credit guarantee corpus of Rs 3,000 crore, with the aim of providing loans to the smallest of businesses. Adhia said commercial banks had not been able to cater to the financing needs of these micro enterprises as the owners had not been able to provide a mortgage. He said these 57.7 million small enterprises employed around 120 million people and the availability of capital was about Rs 11 lakh-crore. Of this, though, only 4% was from institutional sources, he said.

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