MUDRA: A review and revolution of microfinance in India

India has recently launched a range of macroeconomic policy initiatives which are innovative as well as transforming. Launching of Micro Units Development and Refinance Agency (MUDRA) bank is one of them. The main objective of this initiative is to empower Non-Corporate Small Business Sector (NCSBS), fulfil the financial needs of small businesses spreading throughout the country and create as many Micro Finance Institutions (MFIs) as possible. Intertwining the main objective of micro finance the MUDRA BANK is targeting funding the unfunded as alast mile financiers. In most developing countries, financing to the poor through formal financial services failed to meet the requirements because of high risk and high transaction costs associated with them. It is estimated that in developing countries, the formal financial system reaches on an average to only top 25 per cent of the economically active population. India is not an exception. GOI through this initiative has indicated to lend a loan in three categories through MUDRA Bank. NABARD will closely monitor the progress of this policy. If implemented in right spirit, this policy initiatives have the power to bring revolutionary changes in the Indian economy.