Pradhan Mantri Mudra Yojana (PMMY) or Mudra Loan is a funding scheme initiated by Government of India. Mudra loan under PMMY provides funding support of maximum up to Rs. 10 lakh to individuals, SMEs, MSMEs, and non-corporate and non-farm small/micro enterprises. There is no collateral or security required by the banks. The repayment tenure is from 3 years to 5 years.
Mudra loans are offered under PMMY with the help of Public and Private Sector Banks, Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) and Regional Rural Banks (RRBs).
Pradhan Mantri Mudra Yojana (PMMY) Features
- Loans offered under 3 categories: Shishu, Kishor and Tarun
- Maximum Loan Amount: Rs. 10 lakh
- Minimum Loan Amount: No criteria
- Collateral/Security: Not required
- Age Criteria: Minimum 18 years and Maximum 65 years
- Repayment Tenure: Up to 5 years
- Interest Rate: Varies from bank to bank
- Processing Fee: Nil
Mudra Loan Interest Rates
SBI – 9.75% onwards
Andhra Bank – 10.50% onwards
Bank of Baroda – 9.65% onwards
Bank of Maharashtra – 8.55% oonwards
Corporation Bank – 9.35% onwards
The interest rates offered under Mudra Yojana shall vary from bank to bank and depends on the business requirements, applicant’s profile and financial repayment capability.
Loan schemes under PMMY
Loan amount offered- PM Mudra loan scheme has three categories under which loans are disbursed:
- 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)
Who can borrow- Any businessperson or enterprise who/which has not been defaulted on any loan repayment previously is eligible to borrow under the PMMY (Pradhan Mantri MUDRA Yojana). Thus individual business owner, private limited companies, public sector companies, proprietary firms or any other legal business entity can apply for the Mudra loan.
Purpose of Loan assistance- As MUDRA loan is a business loan, the loan amount cannot be used for personal needs. It is provided to small businesses that carry out specific activities in the manufacturing, services or trading sectors. Businesses can utilize the capital obtained from a MUDRA loan for marketing purposes, increasing the available working capital or for acquiring capital assets to grow the business.
Pradhan Mantri Mudra Loan Eligibility
- Age Criteria: Min. 18 years and max. 65 years
- Applicants with no loan defaults
- Applicants with good loan repayment history
- Indian Citizen with no criminal background
Mudra loan can be availed by following entities:
- Small Business Owners
- Traders, Artisans, Retailers and Manufacturers engaged in service, trading and manufacturing sectors, only
Documents Required for Mudra Loan under PMMY
- Business Plan
- 2 passport-sized photographs
- KYC Documents of applicant, partners, co-applicants, if any
- Identity Proof
- Age Proof
- Residence Proof
- Income Proof
- Business Licenses, registrations and certificates, if any
- Business Address Proof
- Proof stating applicant falling in SC/ST or OBC category
Pradhan Mantri MUDRA Yojana (PMMY) Offerings
Pradhan Mantri loan Yojana has a range of loan scheme to offer to its customers. The significant few include the following:
- Micro Credit Scheme – Under this scheme, financial support is extended through Micro Financial Institutions (MFIs) so that they can provide business loans of up to Rs. 1 lakh. Typically the mode of delivery of such loans could include individuals engaged in specific micro enterprise activities, as well various joint liability groups (JLGs) and self-help groups (SHGs).
- Women Enterprise Programme (Mahila Uddyami Yojana) – This scheme is an important part of MUDRA Yojana targeted specifically at women entrepreneurs. It is designed to encourage individual women entrepreneurs, women’s Joint Liability Groups and Self-Help Groups to set up various micro enterprises. Special concessions may be afforded in such cases for example reduction in interest rates of up to 0.25% on loans granted.
- Refinance scheme for Banks – MUDRA allows banks including Scheduled Co-operatives Banks, Regional Rural Banks and Commercial banks to easily refinance loan amounts (up to Rs 10 lakh per unit). The refinance facility is available only if these business loans have been extended for micro enterprise activities. Banks eligible for availing the refinance facility need to comply with requirements that are notified from time to time.
- Mudra Card – MUDRA Card is an innovative credit product which makes credit easily accessible to small business while providing flexibility to the card owner. It can be used as a credit card with overdraft (loan) limit and can also be used as a debit card with the facility of ATM withdrawals. The Mudra Card can be used by businesses to obtain working capital under its unique cash-credit arrangement.
- Credit Guarantee Fund – Also known as the portfolio credit guarantee, this involves the creation and use of a special fund termed as the Credit Guarantee Fund for Micro Units (CGFMU). This fund is managed by the National Credit Guarantee Trustee Company Ltd. and allows eligible entities to receive micro loans with ease.
- Equipment Finance Scheme – This scheme as part of the MUDRA Loan scheme enables small entrepreneurs and micro units to avail a loan to finance the purchase/upgrade of qualifying equipment/machinery. This encourages the enterprises to improve their production techniques to increase overall productivity and efficiency of their business.
- Credit to Micro Enterprises – One of the basic motives of MUDRA is to maximise both the quantum of benefits and the number of beneficiaries from the scheme. A large proportion of India’s population is currently involved in specific sectors including but not limited to land transport, food production, textile production and community services. To meet the growth requirements of these sectors, various tailor-made products and schemes were and are being launched in order to help micro enterprises succeed and prosper.
Must Read: Documents Required for Mudra Loan
Mudra Loan Achievements
Achievements Under PMMY in Financial Year: 2019-2020
|No. of PMMY Loans Sanctioned||62237981|
|Amount Sanctioned||Rs. 337465.13 Crore|
|Amount Disbursed||Rs. 329684.63 Crore|
Above data is last updated on: 21/07/2020
Achievements Under PMMY in Financial Year: 2018-2019
|No. of PMMY Loans Sanctioned||59870318|
|Amount Sanctioned||Rs. 321722.79 CRORE|
|Amount Disbursed||Rs. 311811.38 CRORE|
All in all, the MUDRA scheme has essentially built a great infrastructure for last-mile credit delivery, thus supporting development and promotional activities. It has laid down financial practices that will ensure client protection and will be useful in micro industries further.