Mudra Loan - Pradhan Mantri Mudra Yojana Loan

What is Mudra Loan? 

The Mudra loan refers to loans provided by banks and financial institutions to micro and small enterprises (MSEs) in India under the Pradhan Mantri Mudra Yojana (PMMY) scheme. The PMMY scheme was launched in 2015 by the Government of India with the aim of providing financial support and promoting entrepreneurship in the country.

Mudra loans are collateral-free loans, meaning you do not need to provide any security or collateral to avail of the loan. The loans can be used for various business purposes, including working capital, buying machinery or equipment, expanding business operations, and more.

For a deeper understanding of the Mudra loan details and to learn all about Mudra loan variants, read on.

Mudra Loan Latest News Updates

Achievements Under PMMY Since Inception

 

Types of Companies That Can Avail a Loan Under the Pradhan Mantri Yojana Scheme

The types of companies that can avail a loan under the Pradhan Mantri Yojana scheme include:

• Proprietorship

• Partnership

• Private Limited Company

• Limited Liability Partnership (LLP)

• Small Scale Industries (SSI)

• Micro-enterprises

• Small enterprises

In short, any micro or small enterprise engaged in manufacturing, services, or trading can avail of Mudra Loans under the Pradhan Mantri Mudra Yojana scheme.

Industries Eligible for a Mudra Loan

A key part of this PMMY scheme’s details is noting the industries that qualify. Here are some of the industries that are eligible for a Mudra Loan. 

1. Agriculture and Allied Activities:

This includes farming, animal husbandry, poultry, fishery, beekeeping, and other allied activities.

2. Food Processing and Preservation:

This includes the manufacturing of packaged food, canned food, and other processed food items.

3. Textiles:

This includes the manufacturing of garments, clothing accessories, and other textile products.

4. Handicrafts:

This includes the manufacturing of various handicraft items such as pottery, ceramics, woodwork, and other handmade items.

5. Transport and Logistics:

This includes the transportation of goods, warehousing, and other related activities.

6. Retail Trade:

This includes the trading of goods, both online and offline, including the sale of consumer goods, electronics, and other items.

7. Small Businesses and Service Enterprises:

This includes various small businesses and service enterprises such as beauty parlours, repair shops, and other small service providers.

The scheme is open to micro and small enterprises engaged in any sector, as long as they meet the eligibility criteria.

The Mudra business loan has several defining features that distinguish it from other financial products offered by the government. Some of the features of Pradhan Mantri MUDRA Yojana (PMMY) are as follows:

• It is targeted at businesses engaged in trading, manufacturing, or providing services.

• The loan amount can be used to fulfil working capital requirements.

• The funds can be employed for a diverse group of purposes such as the purchase of machinery, growth expansion, business restructuring, and meeting extended working capital requirements, among other things.

• Both new and existing enterprises can apply for a Mudra scheme.

• The loan repayment tenure ranges between 3 to 5 years.

• One can apply for a Mudra Loan through the official www.Mudra.org.in portal.

Products Offered Under PMMY

The PMMY scheme offers three products namely Shishu, Kishore, and Tarun to eligible entities. The details of these three types of Mudra loan products are as follows.

1.  Shishu 

Shishu loans provided under the Mudra scheme allow entrepreneurs on the threshold of starting a business to borrow up to ₹50,000. The following details need to be furnished to avail the Mudra Shishu loan.

• Quotation of the machinery being purchased and other items that need to be purchased.

• Details of the plant and machinery that has been purchased.

• Details of the supplier who is providing the plant and the machinery.

2. Kishore 

Kishore loans stay within the range of ₹50,001 and ₹5,00,000. They are ideal for business people who require additional monetary resources for expanding their trade. Here is the checklist of the documents needed:

• The balance sheet of the business goes back two financial years

• Income Tax and Sales Tax returns

• Bank account statements going back 6 months

• Estimated balance sheet for the next 1 year or the duration of the loan sought

• Memorandum of Association (MOA) and Articles of Association (AOA), if applicable

• A report exploring the technical and economic sustainability of the applicant’s business

3. Tarun

Tarun loans under the PMMY scheme range from ₹5,00,001 to ₹10,00,000. Business owners who wish to avail of a Tarun loan need to furnish these documents listed below: 

• Proof of address

• Proof of identity

• Certificate of SC, ST, OBC, if applicable

Purpose of Pradhan Mantri Mudra Loan Yojana

The primary purpose of the Pradhan Mantri Mudra Loan Yojana (PMMY) is to provide financial assistance and support to micro and small enterprises in India. The scheme was launched in 2015 with the aim of promoting entrepreneurship, creating employment opportunities, and encouraging financial inclusion.

Eligibility for Mudra Loan

The MUDRA loan can be availed from a range of financial institutions, including public sector banks, private sector banks, regional rural banks (RRBs), small finance banks (SFBs), and micro finance institutions (MFIs).

The eligibility for Mudra Loan is listed below.

Mudra Loan Interest Rates and Charges 

• Interest Rates: The Pradhan Mantri Mudra Yojana allows eligible applicants to borrow funds up to ₹10 Lakhs. The interest rate on the Mudra loan varies depending upon the applicant’s profile and business requirements as well as the discretion of the lending institution.

• Processing Charges: No processing fee is applicable on a Mudra loan for amounts up to ₹50,000. For amounts ranging between ₹50,001 and ₹10 Lakhs, an interest rate of 10% and a processing fee of 0.50% are applicable in addition to GST.

Documents Required to Apply for Mudra Loan 

Before you go ahead and apply for a Mudra loan, you must ensure that a handful of documents are at your disposal. To apply for Mudra Yojana, you will need:

• Two photographs

• Proof of identity: Aadhaar card, PAN card, Voter’s ID, passport, bank passbook, driving license

• Proof of address: Aadhaar card, Residence Certificate, Electricity Bill, Water Bill, government-issued documents

• Copy of your bank statement for the past 3 months

• Copy of your caste certificate. This document will be crucial if you are from a reserved caste

• Business Address Certificate that will count as your business identity and address proof. 

• Copy of Inventory Purchase Bill if you are taking a PM Mudra loan for the purpose of expanding your business

Benefits of Taking Mudra Loan 

The Mudra loan scheme offers several benefits that should help your business objectives. Some of the most notable benefits are as follows:

• No Collateral: It can be difficult for a new/upcoming business to provide collateral, and this is where financing through a Mudra loan can help.

• Nominal Interest Rates: The interest rate on a Mudra loan does not exceed more than 1% per month. The interest rate is heavily driven by individual banks and dependent upon the type of borrower.

• Easy Withdrawal: Once the loan is approved, the loan amount can be withdrawn using the Mudra Loan card at any given point in time, which negates the need for a beneficiary to visit the bank. 

• Flexible Loan Options: The Mudra loan scheme offers flexible loan options based on the stage of the business, which allows businesses to choose a loan amount that suits their financial requirements. 

• Boosts Financial Inclusion: The Mudra loan scheme aims to provide financial assistance and support to micro and small enterprises in India, thereby promoting financial inclusion and entrepreneurship.

• Helps Create Employment Opportunities: By providing financial support to small businesses, the Mudra loan scheme helps in creating employment opportunities, which can contribute to the overall economic growth of the country.

The benefits of the Mudra loan are notable; hence, you must carefully go through the Mudra Loan eligibility criteria before applying. Staying well-informed about the offerings will help you avoid any inconveniences you may face during the application process.

What is a MUDRA Card?

The Mudra card is an innovative product that makes credit easily accessible to small businesses while providing flexibility to the card owner at the same time. It can be used as a credit card with an overdraft (loan) limit and can also be used as a debit card for making withdrawals at an ATM. 

As such, the borrower can use a Mudra card to make multiple withdrawals and credits. Such cards also help with the digitalisation of Mudra transactions, which would be instrumental in creating a credit history for the borrower.

With the PMMY scheme, you can borrow up to ₹10 Lakhs. If your business needs more capital or funds, or if you don’t qualify to borrow under the PMMY scheme, you could always avail of a business loan at Bajaj Markets. At Bajaj Markets, you can apply for business loans as high as ₹75 Lakhs without the need of any collateral. The application process is online, making the procedure quite simple and easy, from approval to disbursal.

News on Mudra Loan

 

The Vast Majority of Mudra Loans are Shishu Loans of up to ₹50,000

As of March 2023, financiers had sanctioned ₹23.2 Lakh Crores of loans under the Mudra scheme. Out of this amount, 40% or ₹9.28 Lakh Crores was provided under the Shishu category. This accounts for 83% of the cumulative 40.82 Crore loan accounts.

 

- April 13, 2023