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Informal Sector Enterprises: Expectations from MUDRA Bank

By Vignesh Jha

Informal sector enterprises do not have the benefit of sector-specific credit policy, while specially designed credit policy to make stakeholder community, belongs to informal sector, able to serve in a better way was need of the nation since independence. Ignoring a sector, which contributes more than 60% to ‘Urban GDP’ is not a symptom of development oriented economy.


Micro-finance is a source of financial services for entrepreneurs and small businesses lacking access to banking and related services. The two main mechanisms for the delivery of financial services to such clients are: (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group.


The rickshaw pullers are  one segment of  informal sector entrepreneurs/workers, which contributes majorly not only to‘Urban GDP’, but acts as the lone non polluting means for ‘Last Mile Public Connectivity’ of city dwellers in India’. Despite continuous knocks on the door of financial institutions, which are considerate towards their subsistence on paper by ‘Federation of Rickshaw Pullers’ Association’, earlier known as ‘Federation of Rickshaw Pullers’ of India’ no assurance has been received in return to our demand for micro-credit to the community of rickshaw heavers on the undertaking of federation. While we approached SIDBI, they demanded personal guarantee of rupee ten million and the dream of receiving micro credit for switching cycle rickshaw pullers master of their carts remained a trance.


After presence of electric rickshaws on the roads of Indian metropolis, emerge of new class of petite capitalist has taken shape, which purchase few electric rickshaws to rent-out to the heavers. They begun to get loans in return of their healthy banking track records and daily return from rented e-rickshaws, which varies from rupee 250 to 350 every day. Banks and financial institutions started on claiming their involvement in financing transport sector workers and hence, the government.


‘Federation of Rickshaw Pullers’ Association’ has from the horse’s mouth know-how about the collapse of ‘self help group’ and ‘joint liability group’ form of micro finance activities, as far as the community of rickshaw heavers are concerned in cities and metropolises of India, because normally migrant workers, which don’t have analogous milieu were frightened about accountability of other group mates and the bitter truth of governance is that the co-operative registration are getting dejected, which allows individuals to be the part of a group without being accountable for other’s banking fail.


Hence, sheer pronouncement or few affirmative paragraphs of MUDRA Bank, which involves the same financial institution SIDBI, is not going to be of assistance to the bona fide last mile transport workers unless:


  • The blueprint, which financial institutions/ MUDRA Bank have agreed upon to adopt for financial real last mile transport workers get unwrapped for stakeholders.


  • Different departments, who are involved in the process of licensing and other permissions, agrees to cooperate with the scheme.

Need of accountable prior ancillary activities, i.e. – unification, inculcation of banking habits, shaping up legitimate cooperative, traffic and behavioral training etcetera, get acknowledged and supported by government agencies and financial institutions.


We are in belief of the fact that simple censuring government and various allied institutions can never transform the state of affairs on ground, therefore, referring to  the sculpt of consecutive steps, adopted by ‘Federation of Rickshaw Pullers’ Association’, in course of arranging stepladder of actions to be taken ahead of linking last mile transport workers with micro credit :

About FoRPI


Federation of Rickshaw Pullers’ Association, fondly known as “FoRPI and FoRPA” is a registered unification of charitable organizations, cooperative societies and trade unions of cycle rickshaw pullers… furthermore a dream, a contemplation to be liberated from shackles of dearth and disregard ahead of a petite endeavour to create sustainable mechanism for ‘Last Mile Connectivity’ via Lone Green Tool of Public Voyage – Cycle/Electric and Solar Rickshaws.

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