Babita, 37, from Hapur, and Pushpa, 43, from Muradnagar, are happy. So are Rajesh Jindal (Hapur), Samiruddin (Trans Hindon, Ghaziabad) and Mahesh Chaudhry (Dadri).

All of them run very small businesses such as tailoring shops, barber shops and cosmetic shops. So far they were forced to take loans from the unorganised sector at an exorbitant annual rate of interest, sometimes even 100 per cent. But now they have got loans of up to Rs 50,000 from banks at much lower rates.

They are the first set of five very small or micro entrepreneurs to have got credit facility under the Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency) Yojana or PMMY, launched here by Prime Minister Narendra Modi on Wednesday.

Set up with the intention to ‘fund the unfunded,’ the new institution aims to provide financial assistance to “unfunded” small entrepreneurs who provide employment to a large number of people. As announced in the Budget, the new institution has been initially set up as an NBFC (Non Banking Financial Company) and as a subsidiary of SIDBI (Small Industries Development Bank of India). Later, it will take the shape of a full-fledged institution to be set up under legislation. It will work as a refinance and credit guarantee organisation and also as a regulator of micro financial institutions.

Modi said one often experiences that things revolve around mere perceptions, while the details often paint a different picture. Giving the example of the perception that large industries create more employment, he said a look at the details reveals the reality that only 1.25 crore people find employment in large industries, whereas small enterprises employ 12 crore people in the country.

He said while a number of facilities have been provided to large industries in India, there is a need to focus on the 5.75 crore self-employed people who use funds of Rs 11 lakh crore with an average per unit debt of merely Rs 17,000 to employ 12 crore Indians. He said these facts, when brought to light, led to the vision for MUDRA Bank.

Generating employment and promoting self-employment is the priority of the Government, the PM said, adding, “Providing loans to small entrepreneurs will provide a big push to the GDP.” Small borrowers repay loans promptly, he said, stressing that “saving is a habit in India and there is a need to (give a) push to this traditional strength.”

Exuding confidence over the success of the new initiative, Modi said, “Write down my words. After one year bankers will queue up in front of MUDRA Bank and ask it to give 50 lakh clients.” Speaking at the event, Finance Minister Arun Jaitley regretted that although 20 per cent of the country’s population is dependent on 5.7 crore micro and small entrepreneurs, they do not have access to institutional credit.

Referring to the Land Bill, Jaitley said about 300 million landless people would get employment in industrial corridors to be set up in rural areas. “This land reform bill that we have brought envisages industrial corridors. When these corridors are set up across the country ... they will create employment opportunities for 300 million landless people,” he added.

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