Introduction
Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme of the Government of India that aims to provide loans up to Rs. 10 lakh to the non-corporate, non-farm small/micro enterprises. The scheme was launched by the Hon’ble Prime Minister on April 8, 20151. The loans are classified as MUDRA loans under PMMY and are given by various lending institutions such as Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs. The scheme has three categories of loans: Shishu (up to Rs. 50,000), Kishor (from Rs. 50,001 to Rs. 5,00,000) and Tarun (from Rs. 5,00,001 to Rs. 10,00,000) to signify the stage of growth and funding needs of the beneficiary micro unit or entrepreneur. The scheme aims to create an inclusive, sustainable and value based entrepreneurial culture in collaboration with partner institutions for achieving economic success and financial security.
Benefits of PMMY
PMMY offers various benefits to the micro and small enterprises in the non-farm sector, such as:
- Easy and hassle-free access to credit without any collateral or guarantee .
- Low interest rates and flexible repayment options .
- Credit guarantee cover for loans up to Rs. 10 lakh under Credit Guarantee Fund for Micro Units (CGFMU) .
- Skill development and training programs for entrepreneurs under Pradhan Mantri Mudra Yojana Skill Development Scheme (PMMY-SDS) .
- Promotion of entrepreneurship and self-employment among women, SC/ST, OBC, minorities, and rural youth .
- Creation of employment opportunities and economic growth.
Eligibility criteria For a MUDRA Loan
- You have to be an Indian citizen.
- You need to own a micro, small scale, or start-up business in non-farm-related income-generating activities in manufacturing, trading, or service sector.
- The credit requirement must be less than Rs. 10 lakh.
- The minimum eligibility age is 18 years, while the maximum age is 65 (at the time of final EMI repayment).
- You should not have any default in your past loans.
- You should belong to SC/ ST/ OBC category (optional).
- You should possess the necessary skills/experience/knowledge to undertake the proposed activity (optional).
Documnets Required For Mudra Laon
Mudra Loan is a scheme launched by the Government of India to provide loans to micro, small and medium enterprises (MSMEs) under the Pradhan Mantri Mudra Yojana (PMMY). The scheme offers three types of loans: Shishu, Kishor and Tarun, based on the stage of growth and funding needs of the business. The maximum loan amount under Mudra Loan is Rs 10 lakh.
The documents required for Mudra Loan are:
- Mudra application form (PDF format) duly completed with passport-sized photographs
- Passport, Voter ID card, Driving License, PAN card, Aadhaar Card, Utility Bills (Water/Electricity Bills), Birth certificate, Class X certificate are all required KYC documents for the applicant
- Income Proof: Last 12 months’ bank statement
- Last year’s ITR, if applicable
- Proof of belonging to SC/ST/OBC Category, if applicable
- Any other document required by the bank or lender
You can apply for Mudra Loan online through the website psbloansin59minutes.com or visit any of the participating banks or NBFCs. You will need to register yourself with your name, email and mobile number. Then you will need to select the type of loan you want (Shishu, Kishor or Tarun) and enter the loan amount and tenure. You will also need to provide your GST, income tax, bank statement and business details. The website will analyze your data and generate a score based on your creditworthiness and eligibility. If your score meets the criteria, you will get an in-principle approval letter from the website within 59 minutes. You can also choose from multiple loan offers from different banks. You can download the approval letter and visit the selected bank branch with the required documents to complete the loan process
MUDRA Loan Interest Rate
The interest rate for MUDRA loans depends on the category of the loan and the lending institution. According to the web search results, the interest rate for MUDRA loans are as follows:
- For Shishu loans (up to Rs. 50,000), the interest rate ranges from 1% to 12% per annum12. The RBI has directed the lending institutions to keep the interest rate at MCLR/base rate12. The maximum interest rate that RRBs and SCBs can charge borrowers is 3.5% more than the MUDRA refinancing rate12.
- For Kishor loans (from Rs. 50,001 to Rs. 5,00,000) and Tarun loans (from Rs. 5,00,001 to Rs. 10,00,000), the interest rate is linked to MCLR/base rate and varies from bank to bank34. Some of the banks that offer MUDRA loans and their interest rates are:
| Bank | Interest Rate | Tenure |
|---|---|---|
| State Bank of India (SBI) | Linked to MCLR | 1-5 years |
| IDBI Bank | Linked to Bank’s Base Rate and Rating | 1-5 years |
| UCO Bank | As per bank guidelines | At the discretion of the bank |
| HDFC Bank | As per bank guidelines | At the discretion of the bank |
| Canara Bank | As per bank guidelines | Up to 7 years |
| Union Bank of India | 10.55% p.a. onwards | 1-3 years |
MUDRA Loan Application Process
To apply for a MUDRA loan, you can follow these steps:
- Ensure that you have the necessary documents ready, such as your ID proof, address proof, and business proof.
- Approach a lender who is enrolled under the MUDRA scheme, such as a bank, NBFC, MFI, etc. You can find a list of participating lenders on the MUDRA website or the BankBazaar website.
- Fill up the application form and submit the required documents to the lender. You can also apply online through the Udyamimitra portal by clicking on “Mudra loan Apply Now” and following the instructions.
- The lender will verify your documents and eligibility and sanction the loan amount as per the MUDRA scheme guidelines. The loan amount will depend on the category of loan you are applying for: Shishu (up to Rs. 50,000), Kishor (from Rs. 50,001 to Rs. 5,00,000), or Tarun (from Rs. 5,00,001 to Rs. 10,00,000).
- The lender will disburse the loan amount to your bank account and you can start using it for your business purposes.
Conclusion
PMMY is a government scheme that aims to empower the micro and small enterprises in the non-farm sector by providing them with easy and affordable loans up to Rs. 10 lakh. The scheme has three categories of loans: Shishu, Kishor and Tarun, to suit the different stages and needs of the enterprises. The scheme also offers various other benefits such as low interest rates, credit guarantee, and skill development training. PMMY is implemented by MUDRA, a subsidiary of SIDBI, in collaboration with various banks and financial institutions. PMMY is a scheme that fosters entrepreneurship and self-employment in India.
Frequently Asked Questions (FAQs)
- What is Pradhan Mantri Mudra Yojana (PMMY)?
- Pradhan Mantri Mudra Yojana, also known as PMMY, is a government initiative in India that provides financial support to micro and small enterprises through various lending institutions.
- Who is eligible to apply for Mudra loans?
- Individuals, entrepreneurs, and businesses in the micro and small enterprise sector, including small manufacturing units, service sectors, and trading activities, are eligible to apply.
- What are the three categories of Mudra loans?
- The scheme offers three categories of loans: Shishu (up to Rs. 50,000), Kishore (Rs. 50,001 to Rs. 5 lakhs), and Tarun (Rs. 5 lakhs to Rs. 10 lakhs), depending on the business’s stage and funding needs.
- Is there any collateral required for Mudra loans?
- No, Mudra loans are collateral-free, making them accessible to a wide range of borrowers.
- Which financial institutions offer Mudra loans?
- Various banks, microfinance institutions, and non-banking financial companies (NBFCs) are authorized to provide Mudra loans. Borrowers can approach these institutions for loans.
- What is the interest rate for Mudra loans?
- Interest rates for Mudra loans may vary among lending institutions but are generally competitive and affordable.
- How can I apply for a Mudra loan?
- You can apply for a Mudra loan through participating banks and financial institutions. Visit their branches or apply online through their websites.
- What can I use the Mudra loan for?
- Mudra loans can be used for various purposes related to your micro or small enterprise, such as working capital needs, purchasing machinery or equipment, expanding business operations, and more.
- Is there a subsidy or interest rate reduction for Mudra loans?
- Yes, certain borrowers may be eligible for interest rate concessions or subsidies based on government guidelines and the nature of their business.
- How can I track the status of my Mudra loan application?
- You can check the status of your Mudra loan application by contacting the lending institution where you applied or by using their online tracking services, if available.
- Are there any special provisions for women entrepreneurs under PMMY?
- Yes, PMMY encourages and supports women entrepreneurs by providing special schemes and incentives to promote their businesses.
- What is the repayment period for Mudra loans?
- The repayment period for Mudra loans varies based on the type of loan and the borrower’s business requirements. It can range from a few years to more extended periods.
- Is there any subsidy for Mudra loans?
- Yes, the government may provide interest rate subsidies for specific categories of borrowers, such as women entrepreneurs and certain economically weaker sections, as per the scheme’s guidelines.
- Is there any processing fee for Mudra loans?
- Lending institutions may charge a nominal processing fee, but it is generally kept low to make the loans affordable for borrowers.
- Can I apply for multiple Mudra loans?
- Yes, if you meet the eligibility criteria and have a genuine need, you can apply for multiple Mudra loans to support different aspects of your business.
With over 15 years of experience in Banking, investment banking, personal finance, or financial planning, Dkush has a knack for breaking down complex financial concepts into actionable, easy-to-understand advice. A MBA finance and a lifelong learner, Dkush is committed to helping readers achieve financial independence through smart budgeting, investing, and wealth-building strategies, Follow Dailyfinancial.in for practical tips and a roadmap to financial success!
