MUDRA Ltd is a government initiative that commenced on 8th April 2015 which stands for ‘Micro Units Development and Refinance Agency’ Limited. It is an NBFC (non-banking finance company) or a public sector financial institution with the goal of enabling the development of India’s micro-enterprise sector by financing the development part of them. In general, MUDRA Ltd provides refinance support to major financial institutions, banks, and other non-banking finance companies so they can lend to micro-units with a loan-requirement of up to ₹10 lakhs.
Source: Transforming India
What is PMMY?
MUDRA Ltd also provides refinance support to micro-business with a scheme known as ‘Pradhan Mantri MUDRA Yojana,’ also known as PMMY. This is a flagship scheme by the Government of India under which MUDRA has formulated a basket of products named ‘Shishu’, ‘Kishore’ and ‘Tarun’ that offers Mudra Yojana loans.
These names signify development and growth and microbusinesses can opt for them basis their financial needs. They also serve as a reference point from which one can look forward to graduating from the next phase of development. Listed below are the differences between each of these schemes.
- Shishu Scheme: Provides loans up to ₹50,000
- Kishor Scheme: Provides loans in between ₹50,000 to ₹5 lakh.
- Tarun Scheme: Provides loans in between ₹5 lakh to ₹10 lakh.
What Are The Industries Covered Under Mudra Yojana
Below is the list of the occupations and sectors that are eligible for the Mudra Loan under PMMY.
- Shop Owners and Traders: Those who trade in agricultural products, chemicals, textiles, are eligible for a PMMY loan. So are shop owners, service enterprises, and any non-farm livelihood promoting and income-generating activities.
- Non-Corporate Small Business Sector (NCSBS): Businesses that operate as small manufacturing units for a product or service and are comprised of a multitude of partnership or proprietorship firms. These businesses can avail of a loan to purchase the necessary pieces of equipment so they can set up their micro-enterprise.
- Community, Social or Personal Service Sector: This comprises of boutique owners, beauty parlor or salon owners, automobile and cycle repair shops, courier agents, dry cleaners, technology stores, desktop or publishing services, Xerox shops, general stores, gyms, drugstores, tailoring shops, clothing, accessories stores, and so on.
- Transport Services Sector: Under this one can buy a transport vehicle such as personal transport, a goods carriage, a passenger car, taxi, rickshaw, e-rickshaw, a small-goods transport vehicle, any three-wheeler, and similar. Even two-wheelers purchased for a commercial purpose are eligible under PMMY loan.
- Food Services Sector: This includes units that involve the preservation of agricultural produce at a rural level. Such as fruit and vegetable vendors, bakery owners, small-service food stalls, bread and bun manufacturing units, any canteen services or tiffin manufacturing business, catering business owners, cold chain vehicles and cold storage unit owners, jams and jelly making businesses, pickle and papad making businesspeople, all kinds of sweet shops, ice cream, and ice manufacturing units.
- Mechanics and Repair Sector: Repair shops or mechanic shed for automobiles, cell phones, laptops, refrigerators, ACs, TVs, and other electronics.
- Textile Workers and Artisans: Comprises of ginning of cotton, pottery and other clay modeling, embroidery, handloom workers, knitting, fashion designers, digital embroidery, dyeing and printing of cloth, any textile non-garment products such as shoes, bags, napkins, tablecloths, utensils, and other furnishing accessories. This also includes manufacturing of vehicle accessories, zardozi and zari work, stitching and other forms of handwork and tailoring.
- Agricultural Sector: Beekeeping, Pisciculture, poultry, grading or sorting agro-industries, livestock-rearing, aggregation agro-industries, fishery, dairy, agricultural clinics, agricultural business centers, agricultural food processing industries (excluding land improvement like irrigation, wells, and canal building, and crop loans) and any agri-services from which an income generates and support the livelihood of individuals.
- Machine Operators: Individuals who work on mining, manufacturing or construction sites and whose purpose is to operate heavy equipment and machinery. These include construction workers who operate drills, truck drivers, crane operators, factory workers, nuclear power plant workers, and similar individuals.
What kind of loans and financing does MUDRA Ltd offer?
There are certain core goals the government hopes to accomplish by offering loans to these segments within the country. With Mudra Yojana, one can expect that these loans will be:
- Business Loans: This is usually for traders, vendors, shop owners, textile workers, artisanal business owners, and any other legal service providing entities.
- Working Capital Loans: This can be availed using a MUDRA debit card by withdrawing part of their capital loan amount using ATM withdrawal.
- Financing Equipment for Manufacturing Micro Units: This is for the purpose of purchasing any heavy machinery or equipment.
- Transport Vehicle Loans: Using this one can purchase a transport vehicle for their commercial purposes.
- Financing any agriculture-related or non-farm livelihood promoting activities.
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