It is probably not surprising that as of 2019, only 10% of startup founders in India were women. Women have been far behind in many fields for centuries, but there has been a steady improvement in the decades after independence. The government recognized their potential and the need to provide them with a level playing ground, with opportunities like the Pradhan Mantri Mudra Yojana (PMMY). While the PMMY is not a special scheme just for women, it is one that promises to help them become entrepreneurs and contribute to the country in a meaningful way. With the help of the PMMY scheme, female entrepreneurs can obtain funding through MUDRA loans. Mudra loans are primarily loans for small time businesses.
Businesswomen and Mudra loans
A single most remarkable factor for measuring the Pradhan Mantri Mudra Yojana’s success would be a majority of the beneficiaries of this scheme have been women. As of last year, women had acquired 75% of a total of Rs.14 crores disbursed as loan through this scheme.
What is a Mudra loan?
Mudra is short for Micro-Units Development and Refinance Agency. It was launched in 2015 under the PMMY by the government of India. It is an initiative for the development of micro, small and medium enterprises. The primary objective of the Mudra loan is to ‘fund the unfunded’.
Loans of upto Rs.10 lakhs are given through select lending institutions. These include small finance banks, commercial banks, RRBs, MFIs, co-operative banks, and NBFCs. There is also an option to apply online through the official PMMY website.
Types of Mudra loans
There are 3 types of Mudra loans under the Pradhan Mantri Mudra Yojana, suited for different stages of your business.
This scheme offers loans of upto Rs.50,000. It is meant for those looking to kick start their business. The government is mostly known to focus on this category of loan.
This category provides loans between Rs.50,000 and Rs.5 lakhs. It is best suited for businesses that have already begun but need more funds to grow.
This category is for loans above Rs.5 lakhs but below Rs.10 lakhs. It is meant for businesses which are already established and plan to expand.
Advantages for women
- In order to encourage businesswomen, the financing institution could consider providing additional facilities with the loan
- These could also include a reduction in interest rate
- Currently, interest rates for MFIs and NBFCs which offer loans to women are reduced by 25bps
How to apply for a Mudra loan online?
You can fill out an online application for the Mudra loan under PMMY through the official website of any of the 29 banks which are a part of the scheme. You will have to fill an online form from the website. This saves the hassle of actually visiting the bank and standing in queues for long periods of time. Here are the steps.
- Download your application form.
- Enter all the details.
- Select a commercial or public bank.
- Upload any relevant documents and follow some other formalities as prescribed by your selected bank.
- The loan should now be sanctioned
Kinds of businesses eligible for Mudra loan
- Micro industries
- Service sector organisations
- Truck owners
- Fruit and vegetable vendors
- Repairing shops
- Foodservice businesses
- Micro manufacturing companies
Documents needed for Mudra loan application under PMMY
- Id proof
- Address proof
- Passport size photos
- Quotations for machinery and other items
- Business id proof
- Business address proof
The repayment period of a Mudra loan is 5 years. Within these 5 years, you have to repay the loan in the form of EMIs. Since the interest rates are relatively low, these EMIs are not very stressful. The objective is thus, to help entrepreneurs to develop their businesses without any stress to their day-to-day operations.
The Mudra Yojana is essentially a take-off ground for women with small businesses like tailoring, handicrafts, packaged food, etc. When budding female entrepreneurs have the potential but not the resources, this loan can bridge the gap and help them follow their goals.
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