Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Hon’ble Prime Minister on April 8, 2015 for providing loans upto 10 lakh to the non-corporate, non-farm small/micro enterprises. These loans are classified as MUDRA loans under PMMY. These loans are given by Commercial Banks, RRBs, Small Finance Banks, Cooperative Banks, MFIs and NBFCs.
The borrower can approach any of the lending institutions mentioned above or can apply online through JanSamarth portal. Under the aegis of PMMY, MUDRA has created three products namely ‘Shishu’, ‘Kishore’ and ‘Tarun’ to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth.
Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme of Government of India. The scheme facilitates micro credit/Loan up to Rs. 10 lakhs to income generating micro enterprises engaged in the non farm sector in manufacturing, trading or service sectors including activities allied to agriculture such as poultry, dairy, beekeeping, etc.
The Scheme provides financial assistance extended by Member Lending Institutions to the non-corporate, non-farm sector income generating activities of micro and small entities.
These micro and small entities comprise of millions of proprietorship / partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits / vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others.
E Mudra Loan Yojana Apply Online
MUDRA Loan Categories?
This is a scheme to provide loans to small businesses and micro institutions. For now, it will just refinance these institutions.
This scheme would intervene in providing finance to these micro institutions in three stages:
- Shishu:
Under the Shishu stage, MUDRA will provide a loan up to RS.50, 000 to small businesses.
- Kishor:
Next is the Kishor stage. Under this stage, MUDRA will provide loans of an amount ranging from RS.50, 000 up to Rs.5 lakh.
- Tarun:
Last stage of intervention is the Tarun stage. Under this stage, loans of amounts ranging from Rs.5 lakh to Rs.10 lakh will be provided.
What are the objectives of the MUDRA Loan Yojana?
MUDRA Yojana is launched keeping in mind various objectives to be fulfilled throughout the implementation of this scheme.
- To lay down policy guidelines to finance micro/small enterprises
- To get all Micro Finance Institutions and entities registered and regulate the same.
- To help small businesses grow and develop their enterprise further.
- To assist lower income groups in setting up and developing their business.
- To help set up responsible financial practices in order to prevent over borrowing for lower income entrepreneurs.
- To help create easy access to finance for the unbanked and also help lower the cost of finance.
- To give SC/ST preference in lending.
- To regulate all Micro Finance Institutions dealing with manufacturing, service and trading.
Thus, MUDRA Loan will help all small businesses gain easy access to finance and regulate the policy guidelines for the same.
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Benefits of Mudra Loan Yojana
As it is stated earlier that the main motto of the mudra bank is to give support and empower the needy people and small business. This will surely make a difference and hence the Indian economy will also start rising. It is not only that the large business and dealers are the main source of the Indian economy. Even the smallest of them can affect the whole Indian economy.
Banking services are not available in the remote areas. Hence the people those who are in need of money, usually take loans from money lenders at a very high interest. The money lenders also exploit them as those poor people cannot do anything. This surely affects the upliftment of the small business sectors.
Objectives of Mudra Loan Yojana
- The utmost important objective is to create a system so that the micro business can get the maximum benefits with minimum risks.
- Also sets up a good process of the last-mile credit agent scheme, which is entirely for the small business setups.
- It also makes a credit guarantee to the one who has taken the loan. It means that the person will not only go into debts. The government will also have to bear the responsibility of the loan.
- There are certain agents hired under the committee who will guide on how to organize and process a business so that there are minimum risks of getting a negative result.
- All the small business units and sectors will be placed under the surveillance, and a regular evaluation will be made based on their performance.
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Mudra Loan Yojana Schemes
There are three schemes and based on these schemes, the loan will be provided. Further the loan is sub-divided under three segments i.e. the starters, mid-stage finance and the level growth seekers. Following are the three loans that are provided by the mudra bank.
- Shishu- This is a starter scheme and the lending amount will be Rs. 50,000.
- Kishor- This scheme is meant for the mid-level business organizations. The amount will vary in between Rs. 50,000 to 5 lakh.
- Tarun- This is the next level scheme and it will help those business organizations who are thinking of having a better business setup. The loan provided will range from Rs. 5 lakh to Rs. 10 lakh.
Who is eligible for loan under MUDRA Loan Yojana?
Under the MUDRA LOAN Yojana, all small businesses and enterprises in need of finance are eligible for a loan.
Eligible borrowers
- Individuals
- Proprietary concern.
- Partnership Firm.
- Private Ltd. Company.
- Public Company.
- Any other legal forms.
Note 01:The applicant should not be a defaulter to any bank or financial institution and should have a satisfactory credit track record.
Note 02: The individual borrowers may be required to possess the necessary skills/experience/ knowledge to undertake the proposed activity.
Note 03: The need for educational qualification, if any, is assessed based on the nature of the proposed activity and its requirement.
Documents Required to avail Loan in Mudra Loan
The documents required to be submitted along with the MUDRA loan application form are as follows.
One Proof of Identity of the applicant should be submitted, It should be self-attested. The proof of identity could be the Voter ID card Photo ID issued by Govt. authority / driving license / PAN card / Aadhar card / Passport etc.
One copy of Proof of Residence of the applicant. It can be anyone from the following. Recent telephone bill (not older than 3 months) / electricity bill (not older than 3 months) / Property tax receipt (not older than 2 months)/ Bank statement duly attested by Bank Official / Voter ID card / Aadhar card / Passport etc.
Two recent Passport size Photographs of loan applicant. Another document to be attached with application form is the Quotation of Machinery for the business or quotation of any other required items to be purchased. Apart from all this, there should be clear delta of name of supplier or details of machinery. It should also include the total amount of machinery or any items to be purchased for the business.
Applicant also needs to submit the proof of Identity or address proof of their Business Enterprise. The document to be submitted should be the copies of relevant and recent Licenses or Registration Certificates of the enterprise. It can also include any other documents which pertain for the identity of owner and also the address of company or business unit.
If the applicant belongs to minority community and wants to avail the loan under that category, then the proof of category should also be added. The proof includes the photocopy of category certificates like SC / ST / OBC / Minority etc.
How to apply for a loan under MUDRA Loan Yojana?
Currently, MUDRA Loan is not an individual body or a different bank as such. To get loan under this yojana, various public and private sector banks have been given the responsibility to provide loans under this scheme. One can approach the following institutions or banks to apply for a loan after having prepared a proper business plan:
How to Apply Mudra Loan?
- Mudra loans can be availed by the eligible people from any of these lending financial bodies, Commercial banks (Private & Public), RRB’s (Regional rural banks), Co-Operative banks (Urban and State), and other Micro Financial Institutions.
- PMMY (Pradhan Mantri MUDRA Loan Yojana) eligible borrowers can approach any of the above mentioned financial institutes, however, each institutions has their own eligibility norms, apart from that no other structural mode of applying process entertained for availing MUDRA loans.
- You should have a business plan with you.
- Take this business plan with any of these banks of org supporting Mudra loan.
- Present your case in front of bank. They will ask you to fill some forms. Since this is a collateral free loan no guarantor is needed.
- Since Government is more keep on giving loan to a women so make sure any female member is included in the business plan.
- Since, MUDRA loans are offered for the improvement of business owning a current account with the respective bank would make the loan process pretty simple and quicker.
- In order to assists the borrowers, the government of India has placed around 97 Nodal officers by appointing them at various SIDBI offices across the nation.
These institutions have to pass the eligibility criteria laid down by MUDRA Loan yojana and are then eligible to provide loans to suitable candidates as per the common parameters, under the PM MUDRA Loan Yojana. When the loan is passed, one will get a MUDRA card, similar to a credit card with limit up to 10% of loan amount to purchase working capital.
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What is the interest rate charged by different lenders for loans under Mudra Scheme?
To be honest, there is no fixed interest rate out there. Different banks have different interest rates. Remember that when we are saying banks, we actually mean eligible private banks, eligible cooperative banks and eligible public sector banks. Apart from that, there are non-banking lenders as well, which include micro finance institutes as well as NBFCs (non-banking financial companies).
Let us take a quick look at the interest rates for loans under Mudra Yojana charged by various lenders (both banks and non-banks). Please note that the table below gives the interest rates for the current year (2017):
| Serial No. | Banks / MFs / NBFCs | Interest Rate Range | Tenure |
| 1. | Vijaya Bank | 13.70% | 1-5 years |
| 2. | Union Bank of India | 14.40% | 1-5 years |
| 3. | UCO Bank | 14.1% – 15.1% | 4-5 years |
| 4. | Tata Capital | 13.49% – 19.50% | 1-5 years |
| 5. | Tamilnad Mercantile Bank | 14.4% – 16.4% | 1-5 years |
| 6. | State Bank of Travancore | 13.2% – 13.45% | 1-5 years |
| 7. | State Bank of Patiala | 12.65% – 14.65% | 1-5 years |
| 8. | State Bank of Mysore | 16.90% | 1-3 years |
| 9. | State Bank of India | 17.80% | 1-4 years |
| 10. | State Bank of Hyderabad | 15.25% – 15.75% | 1-3 years |
| 11. | State Bank of Bikaner and Jaipur | 13.2% – 14.2% | 1-5 years |
| 12. | Standard Chartered Bank | 12.50% – 17% | 1-5 years |
| 13. | South Indian Bank | 14.80% | 1-4 years |
| 14. | Oriental Bank of Commerce | 11.2% – 12.95% | 1-5 years |
| 15. | Kotak Mahindra Bank | 11.5% – 18% | 1-5 years |
| 16. | KarurVysya Bank | 13.9% – 16.40% | 1-3 years |
| 17. | IndusInd Bank Ltd | 12.99% – 18.25% | 1-5 years |
| 18. | Indian Overseas Bank | 14.70% | 1-5 years |
| 19. | Indian Bank | 12.65% – 13.65% | 3 years |
| 20. | IDBI Bank | 12.75% – 13.75% | 1-5 years |
| 21. | ICICI Bank | 11.49% – 17.50% | 1-5 years |
| 22. | HDFC | 12.75% – 20% | 1-5 years |
| 23. | HDBFS | 15.95% – 18.95% | 1-3 years |
| 24. | Fuller-n | 19.50% – 37% | 1-4 years |
| 25. | Dena Bank | 13 % – 14% | 1-3 years |
| 26. | Citibank | 12.75% – 15.75% | 1-5 years |
| 27. | Central Bank | 12.70% | 1-3 years |
| 28. | Capital First | 13% – 20% | 1-5 years |
| 29. | Canara Bank | 13.65% | 1-3 years |
| 30. | Bank of Maharashtra | 15.20% | 1-3 years |
| 31. | Bank of India | 12.7% – 14.7% | 1-3 years |
| 32. | Bank of Baroda | 14.15% | 1-3 years |
| 33. | Allahabad Bank | 13.70% | 1-5 years |
| 34. | Aditya Birla Finance Ltd | 14% | 1-3 years |
Question: Looks like interest rates are dynamic. Is that true?
Answer: Yes, that is true. Interest rates are dynamic because the rates are decided by the institutes that are lending the money under Mudra Scheme. Of course, they work under RBI (Reserve Bank of India) guidelines to ensure products remain cost effective. Also, they need to work under the scheme guidelines.
Question: Why are interest rates different for different banks / non-banks?
Answer: It is very evident from the table above that different lenders have different interest rates. The reason for this is that the Mudra Yojana has not set any particular rate of interest that needs to be followed by all lenders. In fact, lenders have that autonomy to decide on the interest rate and they calculate the interest rates based on various factors, which includes their own risk assessment criteria.
Question: Are the interest rates subsidized by Union Government?
Answer: No, they aren’t. The Union Government will not provide any subsidy to any borrower. The borrowers need to pay as per the guidelines of the lenders (who of course work under RBI and scheme guidelines).
Question: Will interest rates change in future?
Answer: If you have already take out a loan from any lender under Mudra Yojana, the interest rate that was applied on the loan at the time of loan approval, will continue till the repayment is complete. This means, there will be no change in interest rate for anyone who has already taken out a loan. However, those who are planning on taking out a loan under Mudra Yojana in next year or may be later, they may actually see fluctuations in interest rates. As we said earlier, interest rates are determined by various factors and if those factors change, rates of interest may also change.
That’s pretty much everything about Mudra Loan interest rates. In case you have any further queries, feel free to drop your messages.
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