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Banks offer the MUDRA Loan taken up by an individual could attract an interest rate that will be higher than 7.30% p.a. It should be 10 lakh.


Rate of Interest

7.30% p.a

Loan Amount

Up to ₹ 1 Lakh

Loan Tenure

Up to 7 years

Processing Charges

Subject to the Lender’s Terms


MUDRA Loan Interest Rate by Banks

As mentioned earlier, Mudra Loan Interest Rate tends to vary from bank to bank. They majorly depend on the profile of the applicant and the requirements of their business. To find out the exact interest rate, the applicant must contact the respective bank or even check the banks’ official web portal. Below we have tabulated the interest rates charged by banks that are offering Mudra loans.



Interest Rate


State Bank of India (SBI)

Linked to MCLR

1-5 years


As per bank guidelines

At the discretion of the bank


Linked to Bank’s Base Rate and Rating

1-5 years

UCO Bank

8.85% p.a. onwards

At the discretion of the bank

Bank of Baroda

9.65% p.a.

At the discretion of the bank

Indian Overseas Bank

As per bank guidelines

At the discretion of the bank

Union Bank of India

7.30% p.a. onwards

At the discretion of the bank


As per bank guidelines

At the discretion of the bank

Canara Bank

As per bank guidelines

Up to 7 years

Central Bank

As per bank guidelines

At the discretion of the bank

Allahabad Bank

As per bank guidelines

1-5 years

Bank of Maharashtra

9.25% p.a.

At the discretion of the bank

Bank of India

Linked to MCLR

1-7 years

Vijaya Bank

9.65% p.a. (Merged with Bank of Baroda)

At the discretion of the bank

Oriental Bank of Commerce

As per bank guidelines

At the discretion of the bank

Tamilnad Mercantile Bank

8.95% p.a. onwards

1-7 years


Loan Under Pradhan Mantri Mudra Yojana

Under the PMMY scheme, mainly three categories of loans are offered to new and existing business units. The Pradhan Mantri MUDRA Yojana loan interest rate for these categories varies depending upon the amount borrowed and how it will be used.

Shishu Loan: Under the MUDRA scheme, Shishu loans offer proprietors to borrow up to Rs. 50,000 with a repayment period of five years to start their business. The MUDRA loan interest rate for this type of loan ranges from 1% per annum to 12% per annum.

Tarun Loan: The Tarun loan is offered to those entrepreneurs and organisations who wish to expand their business further. This loan allows enterprises to borrow between Rs. 5 Lakhs up to Rs. 10 Lakhs. Generally, the MUDRA loan interest rate for such a loan ranges between 11.5% to 20%, although the rate of interest, as well as the tenor, can vary from lender to lender depending upon the borrower’s credit history.

Kishore Loan: For those who already have established their business but need capital to sustain it, Kishore loans are the solution. Under this loan type, entrepreneurs can borrow between Rs. 50,000 and Rs. 5 Lakhs. The PM MUDRA Yojana interest rate for such a loan can range between 8.60% to 11.15%, though the interest rates can go higher depending upon existing guidelines and the credit ratings of the borrower.

Other loans offered by the PMMY scheme include credit for micro-enterprises, where loans of up to Rs. 1 Lakh are offered by microfinance institutions, the Mahila Udyami Yojana for women who wish to set up their own businesses, and the refinance scheme for banks, where the PMMY scheme refinances loans to registered banks up to Rs. 10 Lakhs extended by them to micro and small firms in the manufacturing and service sector.

However, if you are looking to acquire a business loan from other sources, Finserv MARKETS is here to help. The process to apply for a business loan through Finserv MARKETS is quite hassle-free and straightforward, as it is entirely online and requires minimal documentation.

One of the most common problems that micro and small-scale enterprises face in India is a lack of funding. Banks are often unwilling to lend money to small businesses while private money lenders tend to charge exorbitantly high-interest rates.

FAQs on Mudra Loan Interest Rate

✔️What is the interest rate of MUDRA loan?

The interest rate charged on MUDRA loans varies from one lender to another. The rates are charged as per the individual application profile. 

✔️Why are the interest rates different for different institutions?

The interest rates levied by different institutions will vary. It typically starts at the range of 7.30% per annum.

✔️What does the MUDRA application form look like?

The type of MUDRA application varies depending on the loan category. For the Shishu Loans, the form is 1-page. For the Kishor and Tarun loan, the form is 3-pages. All pages have to be duly filled and submitted. 

✔️What is the limit of MUDRA loan?

The MUDRA loan allows a limit of up to ₹ 10 lakh. 

✔️Do all banks in India fall under the MUDRA Scheme?

Yes, as part of the advisory from the Department of Financial Services, all the Public Sector Banks, Scheduled Commercial Banks and Rural Regional Banks have to disburse loans under the MUDRA scheme. There are targets put against each branch.