Pradhan Mantri MUDRA Yojana (PMMY) | Mudra Loan
The Micro Units Development and Refinance Agency (MUDRA) loan scheme under the Pradhan Mantri Mudra Yojana (PMMY) is an initiative of the Indian government that provides loans to individuals, SMEs, and MSMEs. The PMMY scheme launched by the Honourable Prime Minister on April 8, 2015. This Mudra loan under three loan schemes, namely Shishu, Kishore, and Tarun. The maximum loan amount given under the MUDRA scheme is Rs. 10 lakhs. Banks or loan institutions must not make any guarantee or mortgage to avail of the Mudra Loan Scheme. The repayment of the Mudra loan ranges from 3 years to 5 years with EMI options.
Features of Mudra Loan
- Rate of interest- different from bank to bank, depends on business requirements.
- Guarantee / Security – not required
- Minimum loan amount – not fixed
- Maximum loan amount – up to ₹ 10 lakhs
- Repayment period – 3 years to 5 years
- Processing Fee – Nil
Types of Mudra Scheme – Shishu, Kishore, and Tarun
Individuals can avail of mudra scheme only, SME, MSME, businesses manufactured, trade, and service sectors.
Benefits of Mudra Loan
Types of Mudra Loans
They divided the mudra loan into three types in terms of growth, development of the business, and need for money:
Shishu Loan: The loan for those looking for financial help and want to start their own business. Under this, the maximum loan amount is Rs 50,000. Its interest rate ranges from 10% to 12% per annum, with a repayment period of 5 years.
Kishore Loan: This loan is for those whose business has already started but has not been established yet. The loan amount given under this varies from Rs 50,000 to Rs 5 lakh. The rate of interest varies depending on the lending institution. Along with the business plan, the applicant’s credit record plays a vital role in deciding the interest rate. The bank chooses the term of repayment.
Tarun Loan: This is for those who have established businesses and need money to expand and purchase the property; the loan amount is between 5 lakh to 10 lakh. It based on the interest rate and repayment period, on the credit record of the plan and the applicant.
The interest rates of all these Mudra Loans can vary from bank to bank.
The major objective of Pradhan Mantri Mudra Yojana
- Commercial Vehicles: Purchase of commercial vehicles such as tractors, auto-rickshaws, taxis, trolleys, tillers, freight transport vehicles, 3-wheelers, e-rickshaws, etc.
- Service Sector Activities: Starting a business of salons, gyms, tailoring shops, medicine shops, repair shops, and dry cleaning and photocopying shops, etc.
- Food and Textile Manufacturing Sector Activities: Various Activities in the Related Sector
- Business activities for traders and shopkeepers: Establishment of shops, service enterprises, trade activities, and non-agricultural income-generating activities.
- Equipment Finance Scheme for Small Businesses: Maximum Rs. 10 Lakhs.
- Agro-allied activities: Agri-clinics and agribusiness centers, food and Agro-processing units, poultry, fisheries, beekeeping, pruning, livestock rearing, grading, Agro-industries, diary, fisheries, etc.
Some famous institutions that offer Mudra loans in India
- Bank of Baroda, Syndicate Bank
- Central Bank of India, United Bank of India
- HDFC Bank, Andhra Bank
- Indian Overseas Bank, Bank of Maharashtra
- Oriental Bank of Commerce, Dena Bank
- State Bank of India, IDBI Bank
- Union Bank of India, Karnataka Bank
- Allahabad Bank, Punjab National Bank
- Bank of India, Tamilnad Mercantile Bank
- Corporation Bank, Axis Bank
- ICICI Bank, Canara Bank
- J&K Bank, Federal Bank
- Punjab and Sind Bank, Indian Bank
- Kotak Mahindra Bank, UCO Bank
Documents Required for Mudra Loan
- Business plan
- Application form
- If applicable, passport size photographs of applicant and co-applicant
- KYC documents of applicants and co-applicants
- Proof of Identity (Aadhaar Card / Voter ID Card / Passport / Driving License, etc.)
- Proof of residence (Aadhaar card / voter ID card / passport / telephone bill / bank statement, etc.)
- Income proof (ITR, sales tax return, license, registration, etc.)
- Proof of a particular category, such as SC, ST, OBC, minority. (if applicable)
- Business address and tenure proof, if applicable
- Registration, license, or certificate (if any).
Pradhan Mantri MUDRA Yojana FAQs
Can women's get the Mudra loan?
The government encourages women to entrepreneurship through Mudra Yojana under PMMY. The Indian government has also asked banks, loan institutions, and microfinance institutions (MFIs) to provide loans to women entrepreneurs at low-interest rates. At present, loans are offered to women entrepreneurs under the Mudra scheme from NBFCs and MFIs at 25 essential points lower interest rates.
What is a Mudra card?
A Mudra Card is a debit card issued to loan applicants who want to apply for a Mudra Loan. When a loan applicant applies for a Mudra loan, and if he is approved, his Mudra loan account opens and issues the card with it. The amount is put in a currency account so that loan applicants can withdraw the amount from their currency account.
What is the Mudra Loan Helpline Number?
The toll-free number the Mudra Loan is:
1800 180 11 11
1800 11 0001
How to apply for Mudra Loan?
The application form is available on mudra.org.in so that you can download the form and fill in all the required information. Different banks may have other application procedures for Mudra Loan. It is advisable to start with a bank where you already have an account so that can accept the Mudra loan easily.
Which banks offer Mudra Loan?
Commercial banks, both private and public sector, are eligible for Mudra Loan. There are also some Regional Rural Banks (RRBs), which offer Mudra loans. Since interest rates and eligibility criteria vary slightly from bank to bank, you should obtain the necessary information from a few different banks before applying for a loan.
What is the repayment period of the Mudra Loan?
The repayment period of the Mudra Loan is up to a maximum of 5 years.
What is the amount given under Mudra Loan?
Under Mudra Loan, the minimum loan amount is Rs. 50,000; And the maximum loan amount is 10 lakhs.
Do banks offer different interest rates for Mudra Loan?
Yes, there is a slight difference in the interest rates, eligibility conditions, and application procedures of different banks. However, the interest rates remain within limits prescribed for Mudra Loan by Mudra for Kishore, Kishore, and Tarun Mudra Loans.
Is there any special Mudra loan scheme for women?
Yes, United Mahila Udhami Yojana is a part of Mudra Yojana. Under this, women engaged in economic activities related to production, construction, or service can apply for a loan. This scheme is specifically designed to empower women entrepreneurs and encourage them further. Women holding more than 50% finance in the company can also apply for a Mudra loan under this category.
Is there any reservation for Mudra Loan?
No, any small merchant can apply for Mudra Loan. Anyone eligible for a Mudra loan can get a loan. Therefore, no reservation in Mudra loan is applicable.