The Government of India launched the MUDRA Loan scheme on the 8th of April, 2015 with a sheer motive to provide loans to non-corporate, non-farm SMEs/MSMEs.
The Government of India took the initiative under the Pradhan Mantri Mudra Yojna, also known as PMMY, named Micro Units Development and Refinance Agency for the SMEs and the MSMEs. Kishor, Shishu, and Tarun are the three schemes that this scheme offers.
The minimum amount of loan does not have any criteria, but it can provide a loan of up to 10 lakh. A financial institution does not require any kind collateral or security from a bank to avail MUDRA Loan. The repayment is also flexible, providing a 3-year option and a 5-year option.
Key points to understand about the MUDRA Loan
|Interest Rate||The interest rate varies in every bank and depends on the business requirements of the applicant.|
|Minimum Loan Amount||No minimum criteria|
|Maximum Loan Amount||Ten lakhs is the maximum amount.|
|Tenure for Repayment||Varies from 3 to 5 years|
|Processing Charges||No processing charges|
|Types of schemes||Tarun, Kishor, and Shishu|
SMEs, MSMEs, Manufacturing businesses, Trading, and Services Sectors are the only Mudra Loan sectors.
Advantages of the MUDRA Loan
- Shopkeepers, traders, vendors, trading, and also for other service sector activities have a high probability of getting a MUDRA Loan.
- The Credit Guarantee Schemes introduced by the government of India covers the MUDRA Loans.
- The available loan value may also be beneficial as term loans.
- All small-scaled firms, which have engaged in some income-generating activities, are eligible for Mudra loan.
- MUDRA Loans can also be availed using the MUDRA Cards.
Brief details of the MUDRA Loans
Schemes of the MUDRA Loan
- SHISHU: These Loans range up to Rs. 50,000 and small-scale start-ups or any local company usually benefit from this scheme.
- KISHOR: Under this scheme, the loans vary from Rs. 50,001 up to Rs.5, 00,000. Some machinery, raw materials, or business expansion of an existing firm may benefit from this scheme.
- TARUN: The Tarun loans are the biggest scheme, but with a range from Rs.500,001 to Rs.10,00,000. Well-established firms or enterprises may also benefit from this scheme
The importance of the MUDRA loan
Various income activities are done using the MUDRA loan, mentioning a few below:
- The Purchase of any commercial transport vehicles like tractors, auto-rickshaws, trucks, etc.
- The initialization and set-up for start-ups like salons, gym, tailoring shops, or dry cleaning shops.
- Various activities are required in the Food Industry and the Textile Industry.
- For setting up shops, trading and business activities or service enterprises, who have been generating some income, MUDRA Loan may be useful.
- For micro-units, the maximum limit is up to 10 lakhs.
- The agri-clinics and the agribusiness centers, poultry, beekeeping, grading, livestock – rearing, dairy, fishery, food, and agro-processing units, etc. are also eligible for the MUDRA Loans.
Eligibility criteria for MUDRA Loan
As Directed by RBI, the financial institutions that are interested in the MUDRA Loans must be:
- Micro Finance Institutions (MFIs)
- Public and Private Sector Banks
- Small Finance Banks (SFBs)
- Regional Rural Banks (RRBs)
- Non-banking Financial Companies (NBFCs)
Documents required for the MUDRA
- The applicant should provide a project report which is self-made and self-written format.
- After choosing a corresponding category, the applicant needs to fill the respective form.The filling of the Shishu form is separate from the Tarun and Kishor.
- 2 Passport-sized photos of the applicant.
- Applicants need to provide the KYC documents.
- There should be proof of Identity with every applicant.
- There should also be a proof of residence with each applicant while applying for the MUDRA Loan.
- The evidence of income, if any, such as ITR, sales tax returns, etc.
- In case the applicant is ST, SC, OBC, there should be proof of that.
- Licenses, certifications, or registrations, if any.
MUDRA Loan Interest Rate
The applicant’s profile and the enterprise’s business requirement determine the rate of interest on the loan. This may also vary from bank to bank, as they have their protocols to finalize the claim’s final status.
MUDRA Loan for Women
Women entrepreneurship has been encouraged and supported by India’s government, as they have asked various institutions to extend their facilities for women under the MUDRA Yojna and the PMMY.
Because, these facilities include reducing interest rates on loans for women borrowers. Therefore, currently, a 25 lower basis point determines the final rate of interest for the women entrepreneur.
Given that the applicant receives the loan, a MUDRA Loan account is issued to the applicant. The applicant gets a MUDRA Card corresponding to the account, which also acts like a debit card.
Q. What amount does the MUDRA Loan offer?
The minimum amount does not have any criteria. However, the maximum limit of a MUDRA loan is 10 lakh rupees.
Q.What is the tenure for repayment?
The tenure for repayment extends up to 5 years.
Q. Which banks offer MUDRA Loan?
The banks of the private and public sector, Micro Finance Institutions (MFIs), Small Finance Banks (SFBs), Regional Rural Banks (RRBs) and Non-Banking Financial Companies (NBFCs) as per directions from Reserve Bank of India (RBI)
Q. Can the people from Urban areas apply for the same?
Yes, applicants from urban, suburban, or rural areas engaged in non- agricultural services can apply for a MUDRA Loan.
Q.What are the outstanding facilities for Women?
The facilities include reducing interest rates on loans for women borrowers. Therefore, currently, a 25 basis point is determining the final rate of interest for the women entrepreneur. Under this, women involved in production, manufacturing, or service-related enterprises are eligible for the loan.
Q. Can MUDRA help me in starting my own business?
MUDRA offers loans in various packages to start-ups in manufacturing, agricultural, and non-agricultural fields. However, a few requirements are needed to avail of this loan, as mentioned above in the Eligibility criteria for MUDRA Loan.
Q. Can Iexpand a bakeryvia the aid of MUDRA Loan?
Yes, under the Shishu or Kishor category of the scheme, MUDRA shall also aid you in expanding your business. So, you may contact your nearest Micro Finance Institution (MFI) to know the application procedure.
Q. Are Mudra loans available to some particular category like SC, ST, OBC, or minority?
Any small-scaled start-up can also apply for a Mudra loan. Therefore, anyone who completes all the application formalities and is eligible for the loan can get the loan.
Q. What is a Mudra Card?
With the approval of the MUDRA Loan, the scheme also provides the applicant with a MUDRA Card. It is also a debit card, which owners can swipe at Points of Sale or withdraw cash from an ATM. The Mudra Card uses the RuPay platform.
Q. Are there any recent initiatives by the Government of India for the Mudra scheme?
According to the new Self- Reliant Scheme by the Government of India,
so, here have been various benefits added under the Shishu Category of MUDRA Loans:
- Firstly, there has been a relief of Rs.1500 crore to the borrowers under the Shishu category
- Secondly, for the Shishu Loan category, there has been an Rs.1500 crore Interest subsidy.
- Thirdly, the government of India will give an Interest discount of 2% for fast applicants.