Indian Prime Minister Narendra Modi on Wednesday launched a bank with 200 billion rupees (3.23 billion U.S. dollars) to extend credit to small businesses and regulate micro-finance institutions.
The move is aimed at benefiting some 58 million small businesses in the country which employs millions of low-income laborers and tens of thousands of middle-income skilled workers.
"It's time to 'fund the unfunded,'" the prime minister said when launching the Micro Units Development and Refinance Agency, locally known as Mudra.
"Mudra is our innovation of funding the unfunded," he said. " Millions of common men and women in this country, who run small businesses, have almost remained outside the net of formal institutional finance, in spite of their large contributions to the economy."
India's micro-funding business remains widely unregulated with money lenders taking huge profits from the lucrative black market.
Modi has been campaigning for supporting the country's small and medium-sized businesses since becoming prime minister last May.