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What is the Mudra Loan Scheme?
PM MUDRA Yojana (PMMY) is a Government of India scheme to provide affordable credit to the micro-enterprises engaged in trading, manufacturing and service sectors, including agricultural activities. Micro Units Development and Refinance Agency (MUDRA) is an NBFC which provides refinance support to RRBs, commercial banks, MFIs, small finance banks, and other NBFCs for lending to micro-enterprises. Prospective business loan borrowers can avail MUDRA loans of up to Rs 20 lakh from banks/NBFCs. Borrowers can also avail MUDRA Card for working capital requirements, making cash withdrawals from any ATMs and making purchases through POS machines.
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Key Highlights of MUDRA Loan |
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| Loan Facility | Cash Credit, Overdraft & Term Loan |
| Interest Rates | Depends on the internal policies of banks and NBFCs |
| Loan Amount | For the Shishu category – Up to Rs 50,000
For the Kishore category – Above Rs 50,000 to Rs 5 lakh |
| Tenure | Up to 3 years (up to 5 years for Shishu loans), depending on the internal policies of banks/NBFCs |
| Processing Fees | For the Shishu category (loans up to Rs 50,000) – No processing fee |
| For Kishore, Tarun and Tarun Plus categories – depending on the internal policies of banks/NBFCs | |
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Mudra Loan Interest Rates
MUDRA does not set the interest rates of PMMY loans. The agency has given the freedom to lending institutions to set interest rates for MUDRA loans. Thus, prospective borrowers planning to avail MUDRA loan should contact the concerned bank/NBFC/MFIs for their MUDRA loan interest rates.
Below are the MUDRA loan interest rates offered by various banks:-
| Lenders | Interest Rates (p.a.) |
| Union Bank of India | 10.50%-11.75% |
| Canara Bank | 10.05%-11.75% |
| Indian Bank | 10.55% onwards |
| Central Bank of India | 10.05% |
| Bank of Baroda | 9.15%-11.50% |
| Punjab National Bank | 10.40% |
Updated as of 2 April 2025
Features of PM MUDRA Yojana
Loan Amount
MUDRA loans are categorised as ‘Shishu’, ‘Kishore’, ‘Tarun’ and ‘Tarun Plus’ to signify the development and funding needs of an applicant:
| Category | Loan Amount |
| Shishu | Up to Rs 50,000 |
| Kishore | Above Rs 50,000 to Rs 5 lakh |
| Tarun | Above Rs 5 lakh to Rs 10 lakh |
| Tarun Plus | Above Rs 10 lakh to Rs 20 lakh |
Note: Tarun Plus is offered only to entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.
Collateral
MUDRA loans are collateral-free. These loans are covered under the Credit Guarantee Fund for Micro Units (CGFMU) operated by National Credit Guarantee Trustee Company Limited (NCGTC).
Repayment Tenure
The loan tenure will be determined on the basis of the economic life of the assets created and/or the cash flow generated through MUDRA loan. While the maximum tenure of MUDRA loans can go up to 3 years, the repayment tenure of the MUDRA Shishu loan can go up to 5 years.
Types of MUDRA Loan Facility
MUDRA loans have been categorised into Shishu, Kishor, Tarun and Tarun Plus depending on the loan amount.
The loan amount for the Shishu MUDRA loan can go up to Rs 50,000, the Kishore MUDRA loan can go up to Rs 5 lakh, the Tarun MUDRA loan can go up to Rs 10 lakh, and the Tarun Plus MUDRA loan ranges from Rs 10 lakh to Rs 20 lakh.
Security
The security on MUDRA loans are charged as follows –
- The security is primarily charged on all assets created out of the loan proceeds provided to the borrower and also on the assets directly associated with the business or project for which credit has been extended.
- DPN (wherever applicable).
- CGTMSE (wherever deemed necessary)/MUDRA Guarantee cover (as and when introduced).
Fees & Charges of MUDRA Loan
The lending institutions providing MUDRA loans can consider charging of upfront fee as per their internal guidelines. However, most lenders waive the upfront fee or processing charges for loans under the Shishu category.
Registration Process of PM MUDRA Yojana
Prospective business loan borrowers can visit designated Public and Private Sector Commercial Banks, Cooperative Banks, Regional Rural Banks (RRBs), Micro Finance Institutions, Foreign Banks and Non-Banking Finance Companies to avail loans under PMMY.
Individuals can also apply for MUDRA loans online through the UdyamMitra portal – www.udyamimitra.in
Eligibility Criteria of PM MUDRA Loan
MUDRA loans are offered to the micro-enterprise sector engaged in manufacturing, service, processing, sector, or trading including activities allied to agriculture. The prospective borrower should not be a defaulter in any bank or any financial institution and should have a satisfactory credit track record.
The educational qualification (if any) of an applicant can also be assessed depending on the nature of the proposed activity and its requirements. Furthermore, applicants may be required to have the necessary experience skills, or knowledge to carry out the proposed activity.
Eligible borrowers of PMMY
- Individuals
- Proprietary concern
- Partnership Firm
- Private Ltd. Company
- Public Company
- Any other legal forms
Eligible Activities covered under MUDRA Loan
Transport Vehicle
- Purchase of transport vehicles for transportation of goods and passengers such as auto-rickshaws, small goods transport vehicles, 3 wheelers, e-rickshaws, taxis, etc.
- Tractors/Power Tillers/Tractor Trolleys/Two Wheelers used only for commercial purposes
Community, Social & Personal Service Activities
Salons, gymnasiums, boutiques, DTP and photocopying facilities, tailoring shops, dry cleaning, medicine shops, beauty parlours, cycle and motorcycle repair shops, courier agents, etc.
Food Products Sector
Papad making, biscuit/bread/bun making, jam/jelly making, ice cream making units, agricultural produce preservation at the rural level, achaar making, cold storages, small service food stalls and day-to-day catering/canteen services, cold chain vehicles, ice making units, sweet shops, etc.
Textile Products Sector/Activity
Handloom, chikan work, traditional embroidery and hand work, computerized embroidery, traditional dyeing and printing, zari and zardozi work, powerloom, khadi activity, apparel design, knitting, cotton ginning, stitching and other textile non garment products such as vehicle accessories, bags, furnishing accessories, etc.
Business loans for Traders and Shopkeepers
Loan for trading and business activities/service enterprises, to individuals running their shops and non-farm income-generating activities with a beneficiary loan size of up to Rs 10 lakh per enterprise or borrower.
Equipment Finance Scheme for Micro Units
Individuals setting up micro-enterprises by purchasing required machinery or equipment, with a per-beneficiary loan size of up to Rs 20 lakh.
Activities allied to agriculture
Pisciculture, poultry, livestock-rearing, beekeeping, aggregation agro industries, food & agro-processing, diary, fishery, grading, sorting, agri-clinics and agribusiness centers, etc. and services supporting mentioned activities that promote livelihood or are income generating. Crop loans and land improvements such as irrigation, canals and wells are excluded from the activities allied to agriculture.
MUDRA Card
MUDRA Card is a RuPay debit card, which offers a working capital loan in the form of an overdraft facility. The card allows multiple withdrawals and credits, digitalizing transactions and creating credit history for the borrower. MUDRA card is issued against a MUDRA loan account and can be used across the country for cash withdrawals from ATM/micro ATM or make purchases using any Point of Sale (POS) machines. The borrower can repay the amount anytime, depending on the availability of surplus cash.
Documents required for availing PM MUDRA Loans
Documentation for availing loan under the Shishu Category
- Identity Proof – Self-attested copy of Driving Licence/PAN Card/Voter’s ID Card/ Aadhaar Card/Photo IDs issued by Govt. authority/Passport etc.
- Residence Proof – Latest telephone bill/property tax receipt (not older than 2 months)/ Voter’s ID Card/Electricity Bill/Aadhar Card/Domicile Certificate/Passbook of proprietor or partners or latest bank account statement attested by bank officials/Passport/ Certificate issued by a local panchayat or government authority or municipality etc.
- Recent photograph (2 copies) of an applicant, not older than 6 months.
- Quotation of Machinery or other items to be purchased
- Name of supplier or price & details of machinery and/or items to be purchased
- Proof of Identity and Address of the Business Enterprise – Copies of registration certificates/relevant licenses/ other documents related to the ownership, address and identity of a business unit
- Proof of category like ST/ SC/OBC/Minority etc.
Documentation for availing loan under the Kishor and Tarun Category
- Identity Proof – Self-certified copy of Voter’s ID card/ PAN Card/Aadhar Card/ Driving License/Passport
- Residence Proof – Latest telephone bill, Property tax receipt (not older than 2 months), Voter’s ID card, Electricity bill, Aadhaar Card and Passport of Proprietor/Partners/Directors
- Proof of ST/SC/OBC/Minority
- Identity/Address Proof of the Business Enterprise – Copies of registration certificates/relevant licenses/other documents related to the identity, ownership and address of the business unit
- Account statement of the last 6 months from the existing banker, if any
- Balance sheet of the units of last 2 years along with income tax or sales tax return etc. (Applicable for all cases from Rs 2 lakh and above)
- Projected balance sheets of 1 year in case of working capital limits and for the loan duration in case of term loan (Applicable for all cases from Rs 2 lakh and above)
- Sales achieved during the current FY up to the date of submission of application
- Project report (for the proposed project) having details of economic and technical viability
- Articles and Memorandum of Association of the Partnership Deed of Partners/company/ etc.
- In the absence of third-party guarantee, asset and liability statements from the applicant including directors and partners can be asked to know the net worth.
- 2 photocopies of Partners/Proprietor/Directors
| Related Links |
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| How to Apply for Mudra Loan | Mudra Loan Eligibility |
| Mudra Loan Interest Rates | Mudra Loan Application Form |
| Mudra Loan EMI Calculator | Mudra Loan Documents |
| Mudra Loan Subsidy | SBI Mudra Loan |
FAQs on MUDRA Loan
How to apply for the MUDRA loan?
To apply for a MUDRA loan, borrowers can submit an application online at the UdyamMitra portal – www.udyamimitra.in or through designated lending institutions. Applicants can also visit designated banks and financial institutions to apply for the loan.
What is the interest rate for a MUDRA loan?
Micro Units Development & Refinance Agency (MUDRA) does not determine the interest rates for PMMY loans. Lending institutions have the freedom to set the interest rates for MUDRA loans. Therefore, MSMEs interested in MUDRA loans should contact the relevant bank/NBFC/MFI to inquire about their MUDRA loan interest rates.
How long does it take for the MUDRA Loan approval?
The turnaround time for MUDRA loan approval would primarily depend on the time taken by the loan applicant to provide complete information to the lender and the loan processing procedures of the lender themselves. However, the MUDRA agency has claimed on its website that the turnaround time for processing the Shishu loan proposals usually takes 7 to 10 days on receipt of complete information.
How to apply Shishu MUDRA loan online?
To apply for a Shishu MUDRA loan, prospective borrowers can do so online through the UdyamMitra portal at www.udyamimitra.in. Alternatively, borrowers can also visit designated cooperative banks, RRBs, public and private sector commercial banks, foreign banks, microfinance institutions, and NBFCs that offer Shishu MUDRA loans online.
How to fill MUDRA loan application form?
Borrowers can fill MUDRA loan application form by visiting the UdyamMitra portal – www.udyamimitra.in or by visiting designated lending institutions offering loans online. Applicants can also visit designated banks and financial institutions to apply offline for the loan.
Why was my MUDRA Loan application rejected?
MUDRA loan applications can be rejected for various reasons, most common among them being such as inadequate credit score/history, failure to submit the required documents, low/non-viability of the business project, default in previous loans, inadequate repayment capacity and lack of required licenses to continue business operation.
How can I increase my chances of getting a Mudra Loan?
You can increase your chances of getting a MUDRA loan by understanding the eligibility criteria of designated banks and financial institutions, preparing complete and accurate documentation, developing a comprehensive business plan, maintaining a good credit score, etc.
Are there alternatives to Mudra Loans for small businesses?
Most banks and several NBFCs have unsecured loan schemes in their product offerings. Individuals seeking unsecured business loans can contact these lenders in case they fail to avail MUDRA loans. They can also visit online financial marketplaces like Paisabazaar to check unsecured loan offerings from multiple lenders based on their credit profile.
What are the benefits of a MUDRA loan?
MUDRA loans are collateral-free loans of up to Rs 10 lakh offered to micro and small enterprises. The loan is covered under the Credit Guarantee Fund for Micro Units (CGFMU) operated by National Credit Guarantee Trustee Company Limited (NCGTC) to improve credit access for the MSEs. MUDRA loan borrowers can also avail MUDRA Card, a RuPay debit card, to manage the working capital portion of their loan. They can use the MUDRA Card for drawing cash from ATM or for making purchases through Point of Sale (POS) machines.
Who is eligible for MUDRA loan?
Micro-enterprises engaged in manufacturing, service, processing, sector, or trading activities, including those allied to agriculture, are eligible for availing MUDRA loans. The applicant should not be a defaulter in any bank/financial institution and should have a satisfactory credit track record.
What is Shishu MUDRA loan?
Shishu MUDRA loan is one of the three categories of MUDRA loan, which allows micro-enterprises to avail loan amounts of up to Rs 50,000 in the form of cash credit, overdraft and term loan.
Which banks provide MUDRA loan?
Designated cooperative banks, public/private sector commercial banks, Regional Rural Banks (RRBs), foreign banks and NBFCs provide MUDRA loans.
What is collateral security in a MUDRA loan?
MUDRA offers a loan of up to Rs 20 lakh without collateral security. The collateral is covered under Credit Guarantee Fund for Micro Units (CGFMU) operated by National Credit Guarantee Trustee Company Limited (NCGTC).
What are the documents required for a MUDRA loan?
The documents required for the MUDRA loan include identity and residence proof of the applicant, copies of registration certificates and other documents related to the ownership, identity and address of the business unit.
What is the repayment period for MUDRA loan?
Micro Units Development & Refinance Agency Ltd. (MUDRA) has not specified the repayment tenure of MUDRA loan. The lending institutions are free to determine the repayment tenure of their MUDRA loan borrowers based on the cash flow of their enterprise and the terms & conditions set by the lender.
What is the maximum limit of loans under MUDRA Yojana?
The maximum limit of the MUDRA Yojana loan is Rs 20 lakh.