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What is Mudra Loan?

The Pradhan Mantri Mudra Yojana (PMMY) was launched by the Prime Minister of India on April 8, 2015. An acronym for Micro Units Development and Refinance Agency (MUDRA), this is an institution set up by the government to fund the income-generating activities of micro and small enterprises in the non-farming, non-corporate sector. The Mudra loan, offered as a part of the Pradhan Mantri Mudra Yojana, allows eligible enterprises to borrow funds as high as Rs. 10 lakhs.

What are the features of the Pradhan Mantri Mudra Yojana?

The Mudra loan has a number of defining features that make it one of the best financial products offered by the Government of India. Here’s a look at the primary characteristics of this loan.

  • This is essentially a working capital term loan.
  • It can be used for a variety of purposes, including capacity expansion, modernization, meeting working capital requirements, purchase of plant and machinery, and renovation of business premises, among others.
  • The loan is offered to both new and existing units.
  • The target group of the Pradhan Mantri Mudra Yojana includes businesses involved in manufacturing, trading, or providing services. This is inclusive of allied agricultural activities.
  • The repayment period ranges from 3 years to 5 years.
  • An eligible enterprise can avail the Mudra loan onine.

What are the products under PMMY?

The PMMY scheme offers 3 products to eligible entities, namely Shishu, Kishore, and Tarun. The details of these three products are explained here.

Shishu loan

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

  • Quotation of machinery and other items that need to be purchased
  • Details of plant and machinery purchased
  • Details of the supplier providing the plant and machinery

Kishore loan

Kishore loans range from Rs. 50,001 to Rs. 5,00,000. They’re ideal for businesspersons who require additional funds for expanding their trade. Here’s a checklist of details and documents needed.

  • Balance sheet of the business pertaining to the two previous financial years
  • Income tax and sales tax returns
  • Bank account statements for the previous 6 months
  • Estimated balance sheet for the next 1 year or for the duration of the loan sought
  • Memorandum of association and articles of association, if applicable
  • Sales made in the current financial year before applying for the Mudra loan
  • A report exploring the technical and economic sustainability of the applicant’s business

Tarun loan

Tarun loans under the PMMY scheme range from Rs. 5,00,001 to Rs 10,00,000. Business owners who wish to avail a Tarun loan need to furnish these documents, in addition to the details required for applying to Kishore loans.

  • Proof of address
  • Proof of identity
  • Certificate of SC, ST, OBC, as applicable

With the PMMY scheme, you can borrow up to Rs. 10 lakhs. If your business is in need of more capital or funds, or if you don’t qualify to borrow under the PMMY scheme, you could always avail a business loan on Finserv MARKETS. On Finserv MARKETS, you can apply for loans as high as Rs. 30 lakhs without the need to provide any collateral. The process from application to disbursal is also quick and easy, since there’s minimal documentation involved.

 

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.

Frequently Asked Questions on Mudra Loan

  • Who is eligible to apply for Mudra Loan?

    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.

  • What is the maximum amount of loan you can avail under the PMMY scheme?

    You can avail loans under any of the three products offered by the PMMY scheme. Here’s a breakup of the maximum amounts you can borrow under each of these three products. 1. Shishu loan product: Up to Rs. 50,000 2. Kishore loan product: Up to Rs. 5,00,000 3. Tarun loan product: Up to Rs. 10,00,000

  • Does CIBIL score affect Mudra loan eligibility?

    Your eligibility to apply for a Mudra loan does not depend on your CIBIL 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.

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