Sunday, February 12, 2017

The Truth behind MUDRA Loan and Standup India Loans

The government talks about inclusive growth, development, and enabling people to set up and expand their businesses. The government even came up with MUDRA loan facility for micro-entrepreneurs and Standup India scheme for bigger businesses. Do they really help? Of course, provided you know someone who can get your work done. Before coming to MUDRA loan, let me explain the Standup India scheme loans / support.

Standup India Scheme Details

You will have to arrange a caste certificate or a female gender certificate if you wish to avail help from the Stand up India government scheme. The Standup India scheme is limited to people of scheduled castes (SC), scheduled tribes (ST) and women entrepreneurs. The Stand up India scheme website itself states it clearly.

If you have to get a loan under this scheme, transfer 51% of your company share to someone belonging to ST/ST/ or someone female. Alternatively, you may go for fake SC/ST certificate or better still, a Dalit caste certificate, like Rohith Vemula did for procuring scholarship at Hyderabad University - only to get involved in university politics and kill himself.

You may also opt for gender change operation but then, if you have that kind (much) of money, don't waste your time trying to get any loan under Stand Up India scheme. With that type of money, you need not approach SIDBI or Stand Up India government's SC/ST/Dalit appeasement scheme. Any bank will give you a personal loan or a business loan - the standard types against surety.

So you have a startup idea? First go and find a scheduled caste person who'd be interested to work with you or register your business in your mother, wife, or daughter's name. Of course, you will have to transfer at least 51% (in short, your whole business) to them. Forget it. Better find and get angel investors to invest in your Startup.

The MUDRA Scheme Details

MUDRA scheme is even more interesting. The government did not restrict it to types of people but to certain types of business. No need to talk about the three categories of the loan as they don't make much difference - if your loan application for 10,000 is being financed, your loan application for 10 Lacs may be approved as well.

MUDRA RUPAY Credit Card Schema
Keep in mind that if you intend to spend the loan money on tangible assets, your loan application may be approved. If you know the bank manager or approach loan agents, your chances of getting MUDRA loan will be more. If you want working capital for example, loan for advertising or to start an online business, better go for regular bank business loans where you have more chances of getting approved even with a bad credit rating.

In other words, banks will finance your idea or expansion plan - under MUDRA - only if they are sure of being able to recover the money from you. Ask MUDRA loan for a vehicle/taxi and you will get it. Ask MUDRA loan to buy stocks and you will get it.

Good luck trying MUDRA Scheme loan for any other purpose. This, basically, benefits the banks because not only do they sell their own packages as MUDRA, they also get refinancing from MUDRA. That is a win-win situation for the banks providing MUDRA loan to the "poor entrepreneurs" who have to pledge their vehicle and goods with the bank that's lending them money. So where is the government involved? Just in refinancing the banks!

Summary: MUDRA Loan & Startup India scheme

While I don't have any hopes from the much hyped Startup India Scheme, I think MUDRA can still work out if government gives it the status of a bank instead of keeping it as a refinancing entity. Let's hope someone does that in the future. Or at the least, arranges alternatives for people from General Caste.

Forget that rant above, I'd like to draw your attention to the fact that such schemes have never really benefited any real needy, even if the person is from the SC/ST/Dalit or even Minority category. It is just a method to keep us divided.

I don't expect anything from any government. If it cannot provide proper food to people, how on earth will it improve the lives of citizens? All these schemes and reservations are just an eyewash to fool the people at the bottom of the pyramid. These are the people who really go out to vote, every election... without fail... and they go to vote anticipating just food and shelter. Every political party knows that the day these people are better off, there will be no issues left in the country/society. How can one fight elections without any issues?!

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