What is MUDRA Loan?
Micro Units Development and Refinance Agency (MUDRA) Loan scheme under Pradhan Mantri Mudra Yojana (PMMY) is an initiative by Government of India that offers loans to individuals, SMEs and MSMEs. MUDRA loan is offered under 3 loan schemes named as Shishu, Kishor, and Tarun. The maximum loan amount offered under MUDRA Yojana is up to Rs. 10 lakh, whereas there is no minimum loan amount criteria. No collateral or security is required by banks or financial institutions to avail Mudra loan. The repayment tenure of Mudra loan ranges from 3 years to 5 years with flexible EMI options.
Features of Mudra Loan
|Interest Rate||Varies from bank to bank, depends on business requirements|
|Minimum Loan Amount||No limit|
|Maximum Loan Amount||Up to Rs. 10 lakh|
|Repayment Tenure||From 3 years to 5 years|
|Types of Mudra Scheme||Shishu, Kishor and Tarun|
Mudra loan can be availed by individuals, SMEs, MSMEs, enterprises or businesses engaged in Manufacturing, Trading and Services Sectors, only.
Benefits of Mudra Loan Scheme
- Mudra loans are majorly offered to shopkeepers, traders, vendors, and MSMEs engaged in manufacturing, trading and service sector activities
- Mudra loans are covered under Credit Guarantee Schemes from Govt. of India
- Availed loan amount can also be used as term loans and overdraft facilities
- All Non-farm enterprises, i.e. small or micro firms engaged in the income generating activities can avail Mudra loan
- Mudra loan can be availed via Mudra cards, as well
Mudra Loan Details
Products offered under Mudra Loan
Products offered under Mudra Yojana are classified under 3 loan schemes named as Shishu, Kishor and Tarun. Below mentioned is the loan amount offered under each loan scheme:
- SHISHU Loan: Loans up to Rs. 50,000 (For start-ups and new businesses)
- KISHOR Loan: Loans from Rs. 50,001 to Rs. 5,00,000 (For buying equipment/machinery, raw materials, business expansion for existing enterprises)
- TARUN Loan: Loans from Rs. 500,001 to Rs. 10,00,000 (For established businesses and enterprises)
Purpose of Mudra Loan
Mudra loan can be availed to perform various income generating activities as mentioned below:
- Commercial Vehicle: Purchase of commercial transport vehicles like tractors, auto-rickshaws, taxis, trollies, tillers, goods transports vehicles, 3-wheelers, e-rickshaws, etc.
- Service Sector Activities: Starting businesses of salons, gyms, tailoring shops, medicine shops, repair shops, and dry cleaning and photocopying shops, etc.
- Food and Textile Product Sector Activities: Various activities involved in respective sector
- Business activities for Traders and Shopkeepers: Setting up shops, service enterprises, trading and business activities and non-farm income generating activities
- Equipment Finance Scheme for Micro Units: Maximum loan up to Rs. 10 lakh
- Agri-allied Activities: Activities related to businesses in agri-clinics and agribusiness centres, food & agro-processing units, poultry, pisciculture, bee keeping, sorting, livestock-rearing, grading, aggregation agro industries, diary, fishery, etc.
Also Read: How to Get Collateral Free Business Loans?
Mudra Loan Eligibility
Mudra loan can be availed by the following entities:
- Applicants with minimum age of 18 years and maximum 65 years
- Individuals and MSMEs
- Business owners
- Small Industrialists
- Individuals involved with Agricultural activities
- Startup entrepreneurs
Who provides Mudra Loan?
Financial institutions that are eligible to provide MUDRA Loans, directed by RBI are as follows:
- Public and Private Sector Banks
- Non-banking Financial Companies (NBFCs)
- Regional Rural Banks (RRBs)
- Small Finance Banks (SFBs)
- Micro Finance Institutions (MFIs)
Read More: Detailed Mudra Loan Eligibility
Mudra Loan Documents required
- Self-written business Plan
- Duly filled application form for specific category, Shishu form to be separate as compared to Kishor and Tarun loan category
- 2 recent Passport-sized photographs of the applicant and co-applicant, if applicable
- KYC documents of Applicant and Co-applicants
- Proof of Identity (Aadhar card / Voter’s ID card / Passport / Driving License, etc.)
- Proof of Residence (Aadhar Card / Voter’s ID card / Passport / Telephone Bill / Bank Statement, etc.)
- Income Proof with financials, such as ITR, Sales Tax return, Licenses, Registrations, etc, if any
- Proof of belonging to a special category, such as SC, ST, OBC, Minority, etc. (if applicable)
- Business address and tenure proof, if applicable
- Registrations, Licenses or Certificates, if any
Mudra Loan Interest Rate
The interest rate offered under Mudra loan depends on applicant’s profile and business requirements of the enterprise. However, it varies from bank to bank, as they follow their defined guidelines to finalise on the interest rate to be offered to various applicants.
Mudra Loan for Women
Mudra Yojana under PMMY encourages women entrepreneurship and for that Govt. of India has asked various financial institutions, including Micro Finance Institutions (MFIs) to consider extending facilities, such as reducing interest rates on their loan for women borrowers. Currently, Mudra extends a reduction of 25 Basis Points (BPS) in the interest rates offered from NBFCs and MFIs to women entrepreneurs.
Mudra Loan Eligibility for Women
- Age Criteria: Min. 18 years and Max. 65 years
- Indian Citizen
- Should not have defaulted on any previous loan
- Should not have criminal track record
- Can be availed for new and existing businesses
Mudra card is a debit card that is issued to the loan applicants who wish to apply for Mudra loan. When a loan applicant applies for this loan and if it gets approved, the bank or the lender opens a Mudra loan account and issues the card along with it. The amount is disbursed into the Mudra account so the applicant can debit the amount from their Mudra account. This process also helps in keeping a credit history for the borrower who has applied for this scheme.
FAQs on Mudra Loan
Q. What is the loan amount offered under Mudra Loan?
Ans. The minimum loan amount offered under Mudra loan has no limit, whereas the maximum loan amount sanctioned is up to Rs. 10 lakh.
Q. What is the repayment tenure of the Mudra Loan?
Ans. The repayment tenure of Mudra loan is maximum up to 5 years.
Q. How to Apply for Mudra Loan?
Ans. The application form is available at mudra.org.in, so you can download the form and fill in all the required details. Different banks may have slightly different application procedures. You must visit the nearest branch of the desired bank from where you want to get the loan and submit the filled downloaded form and complete the bank formalities.
Q. Which banks offer Mudra Loan?
Ans. Private and public sector banks, Small Finance Banks (SFBs), Micro Finance Institutions (MFIs), Non-Banking Financial Companies (NBFCs), Regional Rural Banks (RRBs) and Commercial banks in both private and public sectors are eligible to offer Mudra loans, as per sole permission and directions from the RBI.
Also Read: Small Business Loan
Q. Can people from metropolitan cities apply for a Mudra Loan?
Ans. Absolutely! All sole proprietors and the owners of Micro, Small and Medium Enterprises (MSMEs) engaged in non-agricultural services and activities across the country, including metro, urban, semi-urban and rural areas can apply for a Mudra loan.
Q. Is there any special Mudra loan scheme for women?
Ans. Yes there is. United Mahila Udhyami Yojana is a part of the Mudra scheme. Under this, women engaged in production, manufacturing or service-related economic activities can apply for a loan. This scheme is specially formulated to empower women entrepreneurs and encourage them further. Women with more than 50% financial holdings in a company can also apply for a Mudra loan under this category.
Q. How has the Pradhan Mantri loan scheme for ladies benefitted the women of India?
Ans. Mudra Yojana has helped millions of customers to start their own business at affordable interest rates and promoted the MSME sector by creating employment opportunities.
Q. How do financial institutions support Pradhan Mantri Mudra Yojana for ladies implementation?
Ans. Mudra loan is offered with the help of several financial institutions like private and public sector banks, Regional Rural Banks, Micro Finance Institutions, etc. as per the directions of RBI.
Q. What are the key features of the Pradhan Mantri Loan Yojana for ladies?
Ans. The key features of Mudra Yojana include the following:
- Mudra Yojana is categorised into 3 loan schemes, named as Shishu, Kishor and Tarun
- No minimum loan amount criteria
- Maximum loan amount up to Rs. 10 lakh
- Collateral Free Loan
- Repayment Tenure is up to 5 years
Q. I want to start my own business. Can MUDRA help me?
Ans. Definitely! MUDRA offers loans to start-ups in the manufacturing, trading and other non-agricultural sectors. To get a Mudra loan for your start up, you need to present your business plan along with the duly filled application form. Thousands of budding entrepreneurs have already availed Mudra loans to realise their dreams.
Q. I own a bakery business and want to expand it. Can I get a Mudra Loan?
Ans. Yes, you can avail assistance under the “Shishu” or “Kishor” category of Micro Credit Scheme of MUDRA to expand your business. Contact your nearest Micro Finance Institution (MFI) to know the application procedure and eligibility criteria.
Q. Is there any reservation system in place for Mudra loans?
Ans. No. Any micro enterprise or sole proprietor can apply for a Mudra loan. Anyone who is eligible for a Mudra loan and completes the application formalities properly can get the loan. Hence, there is no reservation system applicable for a Mudra loan.
Q. What is a Mudra Card?
Ans. The Mudra Card, is a card that offers cash credit services and can also be used overdraft by small business owners. It can also act as a debit card that owners can swipe at Points of Sale (PoS) with merchants or use to withdraw cash from an ATM. The Mudra card works on the RuPay platform, as well.
Q. What is the recent initiative by Government of India for Mudra scheme?
Ans.As per ‘Atmanirbhar Bharat Abhiyan’ or ‘Self-reliant India Scheme’, Government of India introduced various benefits under MUDRA Shishu Category
- Relief of Rs. 1500 crore to MUDRA Shishu loan borrowers
- Rs. 1500 crore Interest subsidy for MUDRA Shishu Loan category
- Government of India shall provide Interest discount of 2% for fast recipients for a period of 12 months