PM Mudra Loan Scheme: The Pradhan Mantri MUDRA Yojana (PMMY) is a flagship initiative by the Government of India aimed at supporting micro-enterprises across trading, manufacturing, and service sectors, including agriculture-related activities. Through this scheme, small business owners can access affordable credit, fostering entrepreneurship and economic growth.
What is MUDRA?
The Micro Units Development and Refinance Agency (MUDRA) is a Non-Banking Financial Company (NBFC) that offers refinance support to commercial banks, Regional Rural Banks (RRBs), Microfinance Institutions (MFIs), small finance banks, and other NBFCs. These institutions, in turn, provide loans to micro and small enterprises, ensuring easy access to financial assistance.
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Loan Categories and Limits
MUDRA loans are classified into four categories based on the credit requirements of businesses:
- Shishu – Loans up to ₹50,000
- Kishore – Loans above ₹50,000 up to ₹5 lakh
- Tarun – Loans above ₹5 lakhs to ₹10 lakhs
- Tarun Plus – Loans above ₹10 lakh up to ₹20 lakh (available for businesses with a successful loan repayment history under the Tarun category)
These loans help businesses scale their operations, acquire necessary equipment, and expand their reach in the market.
Key Features of PM Mudra Loan Scheme
- Loan Facilities: Business owners can avail loans in the form of term loans, overdraft, cash credit, and composite loans.
- Collateral-Free Loans: MUDRA loans do not require any security, as they are covered under the Credit Guarantee Fund for Micro Units (CGFMU).
- Flexible Tenure: Loan repayment tenure can be up to 3 years for most loans and up to 5 years for Shishu category loans.
- Processing Fees: No processing fees are applicable for Shishu loans, while fees for Kishore, Tarun, and Tarun Plus categories depend on the lending institution’s policies.
- MUDRA Card: Borrowers can avail a MUDRA Card, a RuPay debit card that facilitates cash withdrawals and purchases for business needs.
Interest Rates on MUDRA Loans
MUDRA does not directly set interest rates; (PM Mudra Loan Scheme) lending institutions determine the rates based on their internal policies. Below are indicative interest rates from some leading banks:
| Bank | Interest Rate (p.a.) |
|---|---|
| Union Bank of India | 10.75% – 12.00% |
| Canara Bank | 10.30% – 12.00% |
| Indian Bank | 10.80% – 10.90% |
| Central Bank of India | 10.30% onwards |
| Bank of Baroda | 9.40% – 11.75% |
| Punjab National Bank | 9.40% – 10.65% |
Eligibility Criteria for PM Mudra Loan Scheme
To qualify for a MUDRA loan, applicants must:
- Be engaged in manufacturing, service, trading, or processing businesses, including agriculture-related activities.
- Have a good credit track record with no history of loan defaults.
- Meet any educational or skill requirements relevant to their business.
Eligible Business Entities
- Individuals and sole proprietors
- Partnership firms
- Private and public limited companies
- Other legally recognized business entities
PM Mudra Loan Scheme Application Process
Borrowers can apply for MUDRA loans through designated financial institutions, including:
- Public and private sector banks
- Regional Rural Banks (RRBs)
- Cooperative banks
- Microfinance Institutions (MFIs)
- Non-Banking Financial Companies (NBFCs)
Documents Required
For Shishu Loans (Up to ₹50,000):
- Identity Proof: PAN Card, Aadhaar Card, Voter ID, Driving License, or Passport
- Address Proof: Latest utility bill, Aadhaar Card, Voter ID, or bank statement
- Recent passport-sized photographs
- Business details, including supplier quotations and registration certificates (if applicable)
For Kishore and Tarun Loans (Above ₹50,000):
- Business identity and address proof
- Last 6 months’ bank statements
- Beneficiary receiving loan must have bank balance sheet for last two years (if applicable).
- Projected financials for the proposed business
- Sales records for the current financial year
- Business plan detailing economic and technical viability
Eligible Business Sectors
- Transport: Purchase of commercial vehicles like taxis, e-rickshaws, trucks, and auto-rickshaws.
- Food Processing: Small-scale production units for jam, pickles, bakery items, dairy products, and food stalls.
- Textile Industry: Handloom, embroidery, tailoring, power loom, and garment businesses.
- Retail & Trading: Small retail shops, trading enterprises, and service-oriented businesses.
- Agriculture-Related Activities: Poultry, dairy farming, beekeeping, and food processing units (excluding crop loans).