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Compare interest rates offered by some of the banks providing MUDRA Loan
MUDRA loans are classified under Pradhan Mantri MUDRA Yojana (PMMY) scheme. MUDRA stands for Micro Units Development and Refinance Agency Ltd. This scheme supports the development of the micro enterprise sector in India.
Under PMMY, the Pradhan Mantri Mudra Loan interest rate typically falls within the range of 8% to 18% per annum, depending on the lender, loan category, and borrower’s financial profile. Rates are set by individual lenders under PMMY guidelines. The Government of India does not fix MUDRA loan interest rates; individual banks and lending institutions determine the rates based on their internal policies and regulatory guidelines. It offers a reduction of 25 basis points on interest rates to Micro Finance Institutions (MFIs) and NBFCs, those who provide loans to women entrepreneurs. In the case of the working capital loan, banks charge interest rates only on the amount held overnight.
Read on to learn more about the interest rates offered by different banks on MUDRA loans and tips to get lower interest rates.
The following table provides details about the interest rates and tenures offered by different lending institutions:
| Bank | Interest Rate (p.a.) | Tenure |
|---|---|---|
State Bank of India (SBI) |
Linked to MCLR |
3-5 years (with a moratorium period extending up to 6 months) |
IDBI Bank |
Linked to Bank’s Base Rate and Rating |
12 months to 5 years |
Bank of Baroda |
Linked to MCLR |
Up to 7 years |
Union Bank of India |
As per the bank’s guidelines |
Up to 7 years (with a moratorium period of up to 6 months) |
Central Bank |
Based on RBLR |
7 years |
Indian Bank |
Based on the repo rate |
2-5 years |
Bank of India |
As per the bank’s guidelines |
3-7 years |
Disclaimer: The above interest rates and terms are subject to change at the lender’s discretion. You can use our MUDRA Loan EMI Calculator to estimate your monthly repayment at these interest rates.
Here are certain tips you can utilise to get a MUDRA loan at low interest rates:
Compare the offers from different lending partners like banks, non-banking financial companies (NBFCs), and micro finance institutions (MFIs)
Maintain higher creditworthiness and repayment capacity as banks can offer lower rates to such borrowers
You can also get lower interest rates if your annual turnover is higher and business risk profile is low
A good credit history with no default or late repayments also helps ensure lower interest rates
Applicant’s Income
Higher income levels may lead to lower interest rates as lenders view such applicants as less risky.
Creditworthiness
A strong credit score and history can result in lower interest rates, as it indicates the borrower’s reliability in repayments.
Nature of Business
Businesses with stable revenue streams and lower risks may receive favorable interest rates compared to riskier enterprises.
Required Loan Amount
Larger loan amounts could result in higher interest rates due to increased risk for the lender.
Repayment Tenure
Longer repayment tenures may result in higher interest rates, while shorter tenures could attract lower rates.
Collateral Offered
If collateral is provided, it may lower the interest rate as it reduces the risk for the lender.
Under the Pradhan Mantri Mudra Yojana (PMMY), there is no direct government subsidy on loan interest. The scheme is designed to provide collateral‑free credit and credit guarantee support to lenders. Interest rates are determined by individual banks and NBFCs, and while they may be competitive, they are not subsidised by the government.
A CIBIL score is not always mandatory, particularly for Shishu loans under PMMY. However, lenders generally review the applicant’s repayment history and credit profile to assess risk, especially for higher loan amounts under the Kishore and Tarun categories.
Interest rates under the Pradhan Mantri Mudra Yojana are set by individual banks and NBFCs, not by the government. Rates generally fall within a broad range of around 8% to 18% per annum, depending on the loan category (Shishu, Kishore, or Tarun), the lender, and the borrower’s credit profile.
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