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Everything about Pradhan Mantri Mudra Yojana

By Finserv MARKETS - Feb 22,2020
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Everything about Pradhan Mantri Mudra Yojana

The emergence of Pradhan Mantri MUDRA Yojana

According to the Economic Times, SMEs in India will contribute around $2 trillion to the Indian economy by the end of 2020. Thus, to encourage and financially help entrepreneurs, the PMMY scheme was launched.

The Prime Minister of India, Narendra Modi launched the Pradhan Mantri MUDRA Yojana in 2015 to furnish loans up to ₹10 lakh to new entrepreneurs and existing small businesses. MUDRA, an acronym for Micro Units Development and Refinance Agency, offers loans as a part of PMMY.

Key features of the MUDRA loan

MUDRA loan has a plethora of features that make it one of the best loan schemes put forth by the Indian Government. Here’s a brief look at some of these features:

  • The loan is proffered to both, new businesses as well as existing businesses
  • The Pradhan Mantri MUDRA Yojana targets service sectors, trade sectors, and businesses involved in manufacturing
  • The loan can be utilized to meet working capital requirements, furnish your business premises, upgrade your manufacturing plant, purchase machinery, capacity expansion, and renovation.
  • The repayment tenure ranges from 3-5 years
  • One who fulfills the MUDRA loan eligibility can easily apply for this loan

Products under PMMY

The set of schemes provided by MUDRA loan is divided into 3 categories:

1. Shishu Loan

Entrepreneurs on the verge of starting a business can borrow up to ₹50,000 under this scheme. To avail of this loan, you need to provide:

  • Quotations of the machinery you purchased for your plant
  • Supplier details, along with details of machinery purchased

2. Kishore loan

Entrepreneurs looking for business expansion can opt for Kishore loans, with amounts ranging anywhere between ₹50,001 to ₹5,00,000. The documents required to apply for a Kishore loan are:

  • ITR and sales tax returns for the past 2 years
  • The balance sheet of your business for the past 2 years
  • Summary of sales in the current year prior to applying for a Kishore loan
  • Estimated balance sheet for the next year after receiving the loan

3. Tarun Loan

Entrepreneurs with comparatively more business experience can avail of Tarun loans between ₹5 lakh to ₹10 lakh under the PMMY scheme. The documents required to apply this loan are:

  • Address proof
  • Identity proof
  • Certificate of Caste

MUDRA loan eligibility criteria

A MUDRA loan, as specified, is a business loan, and hence cannot be used for personal uses. It is therefore significant that the borrower must be from any of the following categories of non-corporate small businesses:

  • Service sectors
  • Shopkeepers
  • Vendors (vegetable/fruit)
  • SME units
  • Individual entrepreneurship
  • Food servicers
  • Food processors
  • Truck operators
  • Machine operators

Also, you should comply with the basic MUDRA loan eligibility :

  • You must be an Indian citizen
  • You must be a part of a non-corporate entity
  • The funds provided to you must not be used for your personal uses
  • The age limit to apply for a MUDRA loan is between 23-65 years of age
  • Your annual turnover must be around ₹1.5 lakhs
  • At the bank where you apply for a MUDRA loan, you must have a bank account that is at least 1 year old

Documents required for MUDRA loan application

Ensure that you have the following documents before applying for the MUDRA loan:

  • Proof of identity (Aadhar, Voter ID, PAN, Driving License)
  • Proof of residence (utility bills)
  • Certificate for business registration
  • Income Tax Returns at least for the last 1 year

Loan application process for Pradhan Mantri Mudra Yojana

Financing your business is always a challenge for young entrepreneurs. Here’s how you can easily apply and grow your business by taking a MUDRA loan under the PMMY scheme.

  1. You can get a MUDRA loan application form from any leading financial institutions
  2. Fill in your personal and business details
  3. Ascertain the loan amount prior to applying
  4. Once you comply with the mudra loan eligibility criteria, the loan will be sanctioned and the amount credited in your bank account

Where can you apply for MUDRA loans?

You can apply for MUDRA loans from any of the leading financial institutions of India.

  • Public sector banks
  • Private sector banks
  • Regional and rural banks
  • Microfinance institutions
  • Non-Banking Financial Company

Check out Mudra Bank List

mudra loan

Read more on PMMY Application Form

Now that you have understood the terms and conditions of the Pradhan Mantri MUDRA Yojana, you can go ahead and let your entrepreneurial ideas bloom. If you do not meet the eligibility criteria of PMMY MUDRA loans, you can opt for Bajaj Finserv Business Loan on Finserv MARKETS. Here, you can avail of loans of up to ₹30 lakhs with flexible repayment tenure as per your convenience. You also get competitive interest rates if you avail of a business loan on Finserv MARKETS. The application process is fairly simple and hassle-free. Don’t let lack of funding be an obstacle for your entrepreneurial skills! Get a smooth and speedy business loan from Finserv MARKETS today!

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