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Banks offering 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 Lakhs.

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

Tips to Avail MUDRA Loan at Low-Interest Rates

It is quite simple to avail of a Mudra loan at a low-interest rate. Here are a few suggestions that you can follow and make the process of availing a loan easy, economical, and hassle-free:


  • The first and the most basic thing to do would be to check and compare the loan rates offered by various banks and NBFCs that offer Mudra loans.

  • It is also to be noted that the Mudra Loan interest rate depends on the nature and type of business.

  • Loans at lower interest rates will be made available to businesses that are at lesser risk.

  • Loans will be easy to procure if your creditworthiness and repayment capacity are fitting.

  • In a business set-up, higher the annual turnover and volume, the interest rate offered shall also be less.

  • Some other factors that determine the interest rate could be the applicant’s income, loan amount required, and chosen repayment tenure to pay off the loan.

  • And lastly, it is quite obvious that applicant’s with no previous loan defaults definitely have an advantage over the others. 

Loan Under Pradhan Mantri Mudra Yojana

MUDRA Yojana under Pradhan Mantri Mudra Yojana (PMMY) categorises these loans into three segments - Shishu, Kishor, and Tarun. Here is a detailed description of each of them:


Loan Amount



Up to ₹50,000

This segment is for those budding entrepreneurs who are on the verge of setting up their businesses or whose business is at an early stage.


From ₹50,001 – ₹5,00,000

This segment is for entrepreneurs who are already in business and need larger funds to help them sustain themselves in the industry. Entrepreneurs who require a greater sum of money than what Shishu loan offers for starting their businesses can take advantage of this segment


From ₹5,00,001 – ₹10,00,000

This category offered by MUDRA Yojana under Pradhan Mantri Mudra Yojana (PMMY) offers a loan amount of

₹5 Lakhs and up to ₹10 Lakhs. Entrepreneurs who are setting up a large business or looking for funds to expand their operations can benefit from these loans.

Credit Facilities Offered Under Mudra Yojana

There are various credit facilities offered under Mudra Yojana for specific business needs. These schemes include the following:

  • Micro Entrepreneurs

This model is designed to increase the number of benefits and beneficiaries by maximising the participation of the population. Hence businesses involved in the production of food, textile, land transport, and community service can avail of this model to start their small business and become independent.

  • Mahila Udyami

Keeping women in mind, this model has been designed to encourage them to set up their own businesses. Apart from the money offered, this scheme also intends to offer special and concessional interest rates to every future women entrepreneur.

  • Refinance Scheme

Refinancing is provided to businesses engaged in the trading, manufacturing, and services sectors. However, MUDRA refinances can only be availed by scheduled commercial banks that loan at their base rate to the ultimate borrowers under the scheme.

  • Micro Credit Scheme

This model centres their efforts on Micro Finance Institutions (MFIs) and provides them with the financial support they need. Under this scheme, funds are made available to individuals, groups of individuals, and micro-business entities.

  • Mudra Card

This is a kind of debit card issued to undertake multiple withdrawals and credits. RuPay offers hassle-free credit through its debit card, which is issued on the RuPay platform. The card can be used to avail of working capital for entrepreneurs to run their businesses.

  • Funds for Credit Guarantee

Credit Guarantee Fund for Micro Units (CGFMU) is a fund being managed by National Credit Guarantee Trustee Company Ltd. (NCGTC), which is promoted by the Government of India. Generally, under this fund, Micro Loan Guarantee Fund covers eligible micro-loans sanctioned under Mudra Yojana. Risks related to collateral or security are covered by this fund for banks and NBFCs

  • Finance for Quality Equipment

This model is specifically designed to help expand micro businesses as qualified ones can avail of quality equipment up to ₹10 Lakhs.

FAQs on Mudra Loan Interest Rate

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

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

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. 

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

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.

Yes, you can definitely buy a car using your Mudra loan. Mudra loans can be used to purchase taxis, transport vehicles, as well as passenger cars.

While you can definitely opt for two Mudra loans from two different lenders, it is advisable not to take a Mudra loan twice. This is because it becomes quite inconvenient to pay the EMIs and interest on two loans at the same time.

No, there is an interest chargeable on the Mudra loan. MUDRA loans start at the rate of 7.30% p.a. onwards and the loan repayment tenure ranges between 1 year and 7 years.

No, you cannot get a Mudra loan without ITR, as it is one of the most necessary documents to apply for a MUDRA Loan. If you're eligible for a MUDRA loan, you'll need to provide two years' worth of Income Tax Returns (ITRs) as proof.

Unfortunately, a Mudra loan can be rejected if you don't fit the eligibility criteria as required by the lender. Hence, it is always advisable to check your eligibility criteria with as many lenders as possible and then select a lender that best fits your criteria to avoid any rejection.

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