Pradhan Mantri MUDRA Yojana

The Mudra loan is offered to many business owners with a strong business plan. However, to avail of the loan, one must fulfill the requirements set by the lending institution. Every institution will have its requirements and the rate of interest charged on the loan amount.

In this article, understand the working mechanism of the Mudra loan, eligibility, benefits, features, and process of the Mudra Loan in detail.

PM Mudra Loan

Pradhan Mantri Mudra Yojana (PMMY), also known as Mudra Loan, is a scheme started by the Government of India. The scheme was first introduced on April 8, 2015, by the Prime Minister of India. The Mudra loan scheme aims to provide financial assistance to those who run or plan to start their own micro, small, or medium enterprises. This initiated scheme offers a loan amount of up to ₹ ten lakhs. The scheme has categorized the loans into three, which are Shishu, Kishore, and Tarun.

Shishu

Loan amount up to ₹ 50,000 can be availed under this Mudra Yojana scheme with a nominal interest rate ranging between 10% to 12%.

Tarun

Loan amount up to ₹ 5,00,000 can be vailed under this category of the Yojana. It is an unsecured loan with a nominal interest rate ranging from 14% to 17%.

Kishore

Loan amount up to ₹ 10,00,000 can be availed under this category. Being an unsecured loan, the nominal interest is charged from 16% and varies depending upon the lending institution.

Features of Mudra Loan

Mudra Loan is one of the best Government Schemes for business entrepreneurs in India with the below-mentioned features:

• Mudra loan can be term loan, working capital loan, or overdraft facility loan.
• It offers three kinds of loans: Shishu, Kishore, and Tarun.
• The maximum loan amount that one can avail of for their business is ₹ ten lakhs.
• The interest rate applied on the loan amount depends upon the nature of the business, requirements, and the borrower’s profile.
• The processing fees are either zero or 0.50% of the total loan amount.
• Collateral is not a requirement to apply and avail of the benefits of Mudra Yojana.
• The repayment tenure offered is flexible and can be extended to a maximum of 5 years.
• A nominal fee is charged on the Mudra Loan Yojana.

Business Loan Interest Rate from Top Banks/NBFCs

The PM Mudra loan interest rate is not fixed and keeps changing. Not all banking institutions offer the same rate of interest. PM Mudra loan interest rate for various banks is mentioned in the table below:

Benefits of Mudra Loan

A few benefits of the PM Mudra loan are as follows:

• It is a collateral/security-free loan. Hence, the banks and NBFCs will not ask for collateral from the borrower.
• It offers a low rate of interest on the loan amount.
• Mudra loan also has zero to a nominal processing fee.
• A concession on interest rate is offered for women entrepreneurs in India.
• The Mudra loans are covered under the Credit Guarantee Scheme offered by the Indian Government.
• The amount can be used as a working capital loan, overdraft facilities, and term loan.
• Non-farm-related enterprises, such as small and micro firms that are engaged in services, trading, and manufacturing are involved in money-generating activities can avail of the PM Mudra loan.
• Citizens belonging to the sections of SC, ST, and other minority categories can avail of this loan.

Who is Eligible for PM Mudra Yojana?

Pradhan Mantri Mudra Yojana loan can be availed by business entities who are working in the field of services, trading, and manufacturing. Below is the list of eligible entities for PM Mudra loan:

• Startups, individuals, and self-employed professionals.
• Micro, Small, and Medium-sized Enterprises (MSMEs).
• Street vendors, traders, shopkeepers, artisans, retailers, and small manufacturers.
• Partnership Firms, Sole Proprietorship, Limited Liability Partnership (LLP), and many other business entities.

What Purpose Does Mudra Loan Serve?

The PM Mudra loan scheme was launched to provide financial assistance to small and medium enterprises and help them grow by the Government of India. The major purpose of this scheme is to provide financial aid to the non-corporate-related small enterprise sector via the numerous Last Mile Financial institutions like NBFCs, banking institutions, and MFIs. Here are some of the purposes of a Mudra loan:

• It serves as business finance in service sectors like manufacturing, vendors, shopkeepers, etc.
• It acts as a piece of effective financial equipment for micro-enterprises.
• This loan can also act as a working transport vehicle loan to purchase autos, trucks, etc.
• Mudra loan is also a viable loan solution for non-farm-related sectors like poultry, fishing industry, etc that has the capability to generate income. This can also be a two-wheeler vehicle, truck, and more that is used for commercial purposes.

How to Apply for Mudra Yojana Online?

The steps to apply for Pradhan Mantri Mudra Yojana (PMMY) online are as follows:

Step 1: Visit the official portal of the PM Mudra Yojana authorized site.

Step 2: Download the relevant application form from the three types of Mudra schemes available under the PMMY Kit.

Step 3: Open the form and enter both personal and business details as asked, such as date of birth, name, business/residential address, qualifications, educational background, and more.

Step 4: Submit the PMMY application form. Ensure you have attached all the relevant documents while submitting it to the Last Mile Financial institutions like NBFCs, banking institutions, and MFIs.

Step 5: After submitting, the Last Mile Financial institutions like NBFCs, banking institutions, and MFIs will process it and verify it within 10 days. Once, the application is approved, the loan will be sanctioned in your account within a few days.

How to Apply for Mudra Yojana Offline?

The steps to apply for PM Mudra Yojana offline are as follows:

Step 1: Visit any PMMY-authorised Last Mile Financial institutions like NBFCs, banking institutions, and MFIs. Ensure that you are carrying a well-written application form.

Step 2: Ask for the right PM Mudra Yojana form for Shisu, Kishore, or Tarun and fill it with accurate information.

Step 3: Submit the duly filled form along with required documents and passport-sized photographs to the institution.

Step 4: After submission, the application will be processed and verified within a stipulated time frame. Once, approved, the loan amount will be sanctioned to the bank account of the applicant within a few days.

Required Documents for Pradhan Mantri Mudra Yojana

Banks and NBFCs will ask for a few documents before availing of a PM Mudra Yojana loan as mentioned below:

• Duly filled application form (Different application needs to be filled for Shishu, Kishore, and Tarun respectively).
• Two passport-size photographs.
• KYC documents of both the applicant and co-applicant include Voter ID card, Passport, Aadhaar card, PAN card, driving license, Utility Bills, and others.
• Proof of being a part of a special section of the society (only if it is applicable) – SC, ST, OBC or other Minor sections.
• Bank statement for last 6 months.
• Address of the business.
• Tenure proof (if it is applicable).
• Income Tax Returns (ITR) for the last 2 years.
• Business establishment document proofs.
• Any other documents as asked by the NBFC or banking institution.

PM Mudra Yojana Interest Rate

The rate of interest for Mudra loans varies depending upon the financial institution. Below is the list of interest rates offered by prominent banks and financial institutions of India:

List of Businesses covered under Mudra Scheme

The list of businesses that can avail of the benefits of PM Mudra Yojana are

• Shopkeepers
• Fruits and vegetable vendors
• Non-Corporate Small Business Segment (NCSBS) that are currently running as small manufacturing units that incorporate millions of proprietary or partnership firms
• Service Sector units such as beauty parlors, courier agents, boutiques, cycle repairing shops dry cleaning shops, motorcycle repair shops, DTP and Photocopying Facilities, gymnasiums, pharmacies, salons, tailoring units, etc.
• Truck operators.
• Mudra Loans can also be availed to buy transport vehicles for goods and personal transport which can be used commercially like passenger cars, e-rickshaws, auto-rickshaw, small goods transport vehicles, taxis, 3-wheelers, etc.
• Artisans
• Food-service/vendors units
• Food processing units such as small service food stalls, agricultural produce preservation at the rural level, bread and bun making, biscuit, cold storages, and cold chain vehicles, canteen services, papad making, day-to-day catering, jams/jellies making, and pickle making, ice and ice cream making units, and sweet shops.
• Repair shops or mechanic shacks
• Small industries such as cotton ginning, chicken work, handloom, traditional embroidery and hand work, knitting, computerized embroidery, apparel design, traditional dyeing, and power loom, printing, textile non-garment products such as bags, furnishing accessories, vehicle accessories, zari and zardozi work, stitching and many others.
• Machine operators

Banks/NBFCs offering Loans under Mudra Yojana

There are more than 150 banks and financial institutions that have been selected to be partners in the Mudra Loan scheme. Some of them are listed below:

• Oriental Bank of Commerce
• ICICI Bank
• Kotak Mahindra Bank
• Standard Chartered Bank
• Indian Bank
• State Bank of Patiala
• Bank of India
• Central Bank of India
• IDBI Bank
• Citibank
• HDFC Bank
• Indusind Bank
• Dena Bank
• State Bank of Bikaner and Jaipur
• State Bank of Travancore
• Canara Bank
• Allahabad Bank
• Vijaya Bank
• Karur Vysya Bank
• UCO Bank
• Bank of Baroda
• Union Bank of India
• Tamilnad Mercantile Bank
• Indian Overseas Bank
• South Indian Bank
• Bank of Maharashtra
• State Bank of Hyderabad
• HDFC Bank
• State Bank of India

Mudra Loans for Women Entrepreneurs

One of the government programs for women entrepreneurs to promote an entrepreneurial culture is the Pradhan Mantri Mudra Yojana (PMMY). Women with the desire to start and grow their businesses might choose the Mudra Yojana program, which various banks and financial organizations offer. The loan amount will be given to the women who qualify for this program as a kind of financial support to help them stand strong and create a better future for themselves.

When Mudra schemes for women are approved, banking institutions will issue Mudra cards that function similarly to credit cards to maintain the cash flow of their businesses. The maximum withdrawal allowed with the card is 10% of the loan balance. Depending on the characteristics and needs of the expanding business, the Mudra Yojana offers a variety of programs for women. According to the Indian government, the maximum amount of money that women entrepreneurs may receive is 10 lakhs.

Mudra Card

Mudra Card is similar to a debit card that is used by Mudra loan borrowers for meeting their daily business needs. After the application has been approved, the lender will open a Mudra account for the borrower. Also, a debit card is issued with the account, known as Mudra Card. The loan account is sanctioned in the same account and the borrower can withdraw the same via the debit card in small portions as per the requirements of their business.

Helpline/Customer Care Numbers

One can contact PM Mudra Yojana customer care or helpline services with their queries on the following contact numbers:

Achievements under PMMY (FY 2021-2022)

The achievements of the Mudra Loan scheme are tremendous and have helped thousands of businesses to start and expand in the past year. The achievement of this scheme are as follows:

Frequently Asked Questions