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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.

Achievements Under PMMY Since Inception

Financial Year








No. of PMMY Loan Sanctioned










Loan Amount Sanctioned

₹1,37,449.27 Crores

₹1,80,528.54 Crores

₹2,53,677.10 Crores

₹3,21,722.79 Crores

₹3,21,722.79 Crores

₹2,78,520.37 Crores

₹3,07,00,000 Crores

Loan Amount Disbursed

₹1,32,954.73 Crores

₹1,75,312.13 Crores

₹2,46,437.4 Crores

₹3,11,811.38 Crores

₹3,11,811.38 Crores

₹2,63,741.95 Crores

₹3,07,190 Crore

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.

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Features of Mudra Loan

Features of Mudra Loan

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.

Mudra Loan Infographic

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.

Shishu Loan uder Mudra Scheme

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

Kishore Loan under Mudra Scheme

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

Tarun Loan under Mudra Scheme

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.



Minimum Age

18 years

Maximum Age

65 years

Eligible entities

New and existing units for service sector, trading, or manufacturing activities

Security or Collateral

No collateral or third-party security is required

Institutions Eligible

Public Sector Banks, Private Sector Banks, Micro Finance Institutions, and Regional Rural Banks

Documents Required

Proof of identity, proof of residence, application form and passport size photos

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

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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.

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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

Record Mudra Loan Payments, UPI Information, and More are Shared on Twitter by Amit Shah

In a series of tweets shared by the Home Minister, Shri Amit Shah, it was mentioned that up to April 2023, Mudra loans worth ₹22 Crores have been disbursed. While highlighting the achievements that have contributed to the country’s economic progress, the Home Minister credited the Mudra scheme for generating over 3.72 Crore jobs. He mentioned that more than 40 Crore loans have been disbursed so far. As per the Mudra scheme portal, about ₹4.5 Lakh Crores as loan amount has been disbursed in the financial year 2023.

- June 19, 2023

Women Business Owners Receive the Majority of Loans Under the Mudra Yojana

Given by NBFCs, commercial and small banks and MFIs, the Mudra Loan scheme allows loans up to ₹10 Lakhs. Having completed 8 years, government data shows that out of the 40 crore borrowers, 69% are women. So far up to ₹27 Crores has been disbursed to women beneficiaries. By offering financial support to women the government aims to make them more active contributors to the country’s development.

- June 01, 2023

Mudra Loan Approvals and Disbursements Reached a Record High in FY23; Ticket Size Almost Doubled: SBI Analysis

As per the reports, there is a significant hike in the number of loans worth ₹10 Lakhs sanctioned and disbursed to small enterprises under the PMMY in 2022-23.


The number of these sanctioned faced a drop during the pandemic, but it is recovering. Before the pandemic, the growth rate of loans disbursed was 33%; which declined during the pandemic; in the post-pandemic period, the growth rate is around 36% indicating healthy growth of the Indian economy.


In 2016, the average PMMY loan ticket size was ₹36,000. Currently, the loan ticket value is ₹72,000 for 2023.

- May 18, 2023

Small Business Loans Under PMYY Witness a 34.7% Increase in Total Disbursements

As per latest update from the Micro Units Development & Refinance Agency Limited (MUDRA), small business loan disbursements under Pradhan Mantri Mudra Yojana (PMYY) have reached a record high. Total disbursement for the financial year 2022-23 stood at ₹4.46 lakh Crores, a 34.7% increase over last year’s total disbursement of ₹3.31 lakh Crores


“We find that the scheme is relatively better known in rural areas now compared to previous years and there has been a greater demand from rural areas especially for women SHISHU loans,” a senior MUDRA official said.

- April 17, 2023

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

FAQs on Mudra Loan

While it is smart to avail a Mudra loan, to apply and get funding successfully, you need to meet the terms. Small manufacturers, shopkeepers, artisans, and individuals carrying on agricultural activities like rearing livestock and raising poultry are all eligible to apply for the Mudra loan under the PMMY scheme.

All small businesses, whether they’re proprietary concerns or firms in rural or urban areas, can avail Mudra loans. Keep in mind that the applicant must be an Indian citizen above 18 years of age.

You can avail loans under any of the three products offered by the PMMY scheme and the maximum amount available is ₹10 Lakhs.

Your eligibility to apply for a Mudra loan does not depend on your credit score. So, anyone who fulfils the other criteria required to avail this loan can go ahead and apply for the same, irrespective of their credit history.

At present, there is no Mudra loan subsidy on offer. But, the interest rates are much lower than what banks charge. Through Mudra Loan, credit to small businesses is given at reasonable rates.

Yes, a bank can reject a Mudra loan application if the applicant fails to meet the eligibility criteria or if the bank finds the project or business plan to be unviable.

If a borrower fails to repay a Mudra loan, the bank can take legal action to recover the outstanding amount, including seizing the collateral, if any.

No, GST (Goods and Services Tax) registration is not mandatory to avail a Mudra loan. However, GST registration may be required depending on the type of business activity.

The Pradhan Mantri Mudra Yojana (PMMY) is aligned with other government initiatives such as Startup India, Digital India, and Make in India, which aim to promote entrepreneurship, innovation, and manufacturing in India.

The repayment period for Mudra loans varies depending on the type of loan. For Shishu loans, the repayment period can be up to 5 years, while for Kishore and Tarun loans, it can be up to 7 years.

Yes, you can complete the Mudra loan registration process offline by visiting any of the authorised financial institutions such as public sector banks, private sector banks, regional rural banks (RRBs), small finance banks (SFBs), and micro finance institutions (MFIs). 


You can also download the Mudra loan application form from the official website of the Mudra Yojana and submit it offline to the nearest authorised financial institution.

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