18 Jun 2020
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The Pradhan Mantri MUDRA Yojana (PMMY) was a scheme instituted by the Government of India in 2015 to promote entrepreneurship among its citizens and aid in the growth of small enterprises in the non corporate and non farming sectors of the economy. To this end, it offers assistance by means of collateral free loans of upto Rs. 10 Lakhs given to MSMEs for fixed tenures with minimal processing fees. The Micro Units Development and Refinance Agency Ltd.(MUDRA) was set up by the Union Government to supervise this venture and was tasked with directing Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks,  Non Banking Financial Companies (NBFCs) as well as Micro Finance Institutions (MFIs) to issue such loans to small business owners. These loans can be divided into three categories based upon the loan amounts involved:

  • Shishu Loan- Loans of upto Rs. 50,000

  • Kishore Loan - Loans between Rs. 50,000 and Rs. 5 Lakhs

  • Tarun Loan - Loans between Rs. 5 Lakhs and Rs. 10 Lakhs

Features of The MUDRA Shishu Yojana

MUDRA Shishu loans are the main focus of the loan aspect of the scheme. The loan can be used for a variety of purposes such as for working capital, modernization, expansion, equipment purchases or renovation to name a few. It can be obtained by new or existing enterprises such as: 

  • Self proprietors

  • Service sector firms

  • Micro enterprises and industries

  • Repair shops

  • Truck owners

  • Fruit and vegetable vendors

  • Micromanufacturing enterprises 

Like the other types of loans in the scheme, the MUDRA Shishu Yojana is structured to cater to specific scales of operations, such as aspiring entrepreneurs or businesses in their initial stages and possesses the following features:

  • Loan amounts of up to Rs. 50,000

  • Zero Processing Fees

  • Repayment period between 3 to 5 years

  • Online as well as in person application processes

Though interest rates vary depending upon the service providers involved and depend upon the borrower’s credit history , they generally do not exceed 12% per annum. Additionally, a subvention of 2% of the interest for MUDRA Shishu loans for a period of 12 months was announced by the Union Finance Ministry in May 2020 in order to provide relief to failing small businesses in the country affected by the pandemic. 

Application Procedure Mudra Shishu Loan

The procedure to be followed when applying for Shishu loans is as follows:

  • The loan application form is available for download on the website https://www.mudra.org.in/Home/PMMYBankersKit.

  • Accurately fill in the details of the form.

  • Apply for the loan at the financial institution of your choosing either in person or through online portals.

  • Complete any other formalities involved.

  • On finishing the above steps, the loan will be approved depending upon your credit history and requirements.

Documents to be submitted for MUDRA Shishu Loan

  • Identity Proof such as Voter ID, PAN Card, Aadhar Card, Driver’s Licence, Passport or any other government issued photo ID.

  • Residence Proof such as telephone or electricity bills, property tax receipts (not older than 2 months), Aadhar Card, Voter ID, Passport, Bank passbook or account statements or domicile certificates issued by the concerned local body.

  • Two recent photographs (not older than six months)

  • Quotation of machinery or any other items to be purchased with the loan

  • Name of the supplier, details of the machinery and/ or item prices

  • Proof of the Identity/Address of the business or enterprise with copies of relevant licenses, registration of ownership etc

  • Proof of category such as SC/ST/OBC, if applicable

The MUDRA Shishu Yojana serves the primary focus of PMMY as it aims to benefit many MSMEs all over the country. This is backed up by its easy application process, low MUDRA loan interest rates and the availability of MUDRA loan cards that allow borrowers to access funds without having to make repeated visits to financial institutions. The loan can be availed through the Finserv MARKETS portal.

However, if your capital requirements are larger than Rs. 50,000 the Bajaj Finserv Business Loans available on the Finserv MARKETS portal can help you avail amounts up to Rs. 30 Lakhs. These loans include special Business loans for Women and MSMEs as well. Availing these through the Finserv MARKETS portal ensures that your application process is entirely online and frictionless, helping you secure the funds you need.

Read more on Mudra Loan Application Form

 

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