MUDRA Loan

Pradhan Mantri MUDRA Yojana (PMMY) is a loan scheme introduced by the Hon’ble Prime Minister of India on 8th April 2015 for providing loans up to Rs. 10 Lakhs to non-corporate, non-farm small/micro enterprises. These MSME loans are classified as MUDRA loans under PMMY. MUDRA loans are given by Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Micro Finance Institutions (MFIs) and Non-Banking Financial Companies (NBFCs). The borrower can approach any of these lending institutions or apply online through the www.udyamimitra.in portal. Under the aegis of PMMY, MUDRA has created three product categories namely 'Shishu', 'Kishore' and 'Tarun'. These categories also signify the stage of growth/ development and funding needs of the beneficiary micro unit, and entrepreneurs and also offer a reference point for the next phase of graduation/ growth.

Following are some of the benefits of the PMMY scheme:

• Flexible amount of loan: Any non-corporate/ non-agricultural firm classified as a small or micro-industry can avail of financing up to Rs. 10 Lakhs under the MUDRA scheme, for setting up and functioning of the business.
• Loan for multiple purposes: MUDRA loans can be utilised for many purposes including the purchase of equipment purchase or transport vehicle purchase, trading, and allied agricultural activities. 
• Loan for all: These loans are available to manufacturing, retail, service, food products, and textile sectors as well as for personal services, community and social service ventures, retail stores, traders, etc.
• Availability of term loan & working capital: Besides a term loan up to Rs. 10 Lakhs, borrowers can also avail of working capital for funding the day-to-day activities of their businesses. The working capital can be availed in the form of a Mudra debit card, which enables entrepreneurs to withdraw cash multiple times from ATMs across India and make any purchase via POS machines in stores. 
• Support for development: MUDRA helps business owners overcome the issue of lack of skilled employees by offering support and development services. The aim is to build up an ecosystem that provides businesses with skilled workers and employees to enable business growth. 
• No collateral needed: To ensure that the lack of collateral does not hinder business owners’ entrepreneurial ventures, the loans provided are collateral-free and secured by a credit guarantee scheme that only needs them to pay an affordable annual fee.
• Affordable funding: Mudra loans are offered at the lowest possible interest rates and they also have a reasonable cap on the interest chargeable based on the business profile and the industry.
• Flexible repayment tenure: The term loans under the scheme come with a flexible repayment period of up to 5 years. This allows borrowers to choose a tenure at their convenience to make EMIs more affordable.

Following are the MUDRA Loan interest rates offered by some of the top banks in India:

• Processing fees: Nil for Shishu and Kishore Loans and 0.5% of the loan amount for Tarun Loans.
• Foreclosure charges: Nil.
• Concession in interest rates: Available for women entrepreneurs.

Depending on the loan amount required, there are three categories of Mudra Loans that you can apply for:

Mudra Loans can only be availed through partner banks or financial institutions. Here are the top 5 banks that offer Mudra Loans in India:

1) SBI: SBI offers PMMY up to Rs. 10 Lakhs in the form of Working Capital and Term Loans to businesses in manufacturing, trading, and service sectors (including allied agricultural activities) for business purposes, capacity expansion, and modernisation. The loan amount offered is up to Rs. 50,000 under Shishu Loans, Rs. 50,001 to Rs. 5,00,000 under Kishore Loans and Rs. 5,00,001 to Rs. 10,00,000 under Tarun Loans. The margin requirement is 20% for loans of Rs. 50,001 to Rs. 10 Lakhs. These loans can be repaid in up to 5 years (TL/Dropline OD below Rs. 5 Lakhs) or 7 years (TL/Dropline OD of Rs. 5 Lakhs to Rs. 10 Lakhs. The banks charge zero processing fees for Shishu and Kishore and 0.50% plus applicable taxes for Tarun.

2) UCO Bank: UCO Bank extends Mudra Loan up to Rs. 50,000 under Shishu, Rs. 50,001 to Rs. 5 Lakhs under Kishore, and Rs. 5,00,001 to Rs. 10 Lakhs under Traun schemes. The rate of interest in PMMY is linked to the floating rate. No processing fee is charged by the bank and there is no need to provide any collateral to avail of the loan. The repayment tenure of the loan is extended up to 5 years. Applicants should not be defaulters of any bank or financial institution.

3) PNB: Under PMMY, Punjab National Bank extends collateral-free finance to the non-farm sector of micro-enterprises indulged in the business of manufacturing, trading or service sector in rural, urban and metro locations for income generation purposes. Any individual, proprietary, partnership firm, company, association of persons, limited liability partnership, etc. (not a defaulter to any Bank/ Financial Institution) is eligible to avail of a MUDRA loan. The bank offers PMMY in three variants, i.e. Shishu (loans up to Rs. 50,000), Kishore (loans above Rs. 50,000 to Rs. 5 Lakhs), and Tarun (loans above Rs. 5 Lakhs to Rs. 10 Lakhs). The interest rate is in the range of Base Rate to Base Rate + 2.25% + TP. Application forms for Shishu, Kishore, and Tarun loans under MUDRA are available at the bank’s corporate website i.e. www.pnbindia.in.

4) ICICI Bank: Under the aegis of PMMY, ICICI Bank offers collateral-free MUDRA loans under three categories i.e. 'Shishu', 'Kishore', and ‘Tarun’ of up to Rs. 50,000, above Rs. 50,000 to Rs. 5 Lakhs, and above Rs. 5 Lakhs to Rs. 10 Lakhs respectively. All Non-Corporate Small Business Segments are eligible for assistance under MUDRA. ICICI Mudra Loans can be availed for the purchase of commercial vehicles/ cars / two-wheelers, working capital requirement/ buying plant & machinery, renovating offices, etc, and dropline overdraft/ overdraft facility.

5) Bank of India: Bank of Baroda offers Mudra Loans up to Rs. 10 Lakhs at affordable interest rates for the tenure of 36 to 84 months, including the moratorium period. There is no margin requirement for loans up to Rs. 50,000 and 15% for loans between Rs. 50,000 and Rs. 10,00,000. These are collateral-free loans and are covered under the CGFMU guarantee. A processing fee of Rs. 250 per lakh is charged for loans above Rs. 1 Lakh in rural & semi-urban branches and Rs. 300 per lakh in urban & metro branches.

To apply for a Mudra Loan, the applicant has to fulfill certain eligibility criteria. Mudra loans are available to non-corporate small business segments (service sectors, manufacturing, and retail sectors).

PM Mudra loan eligibility for all three categories is given below:

• Age: 18 to 65 years.
• Citizenship: Indian citizen with no history of criminal records.
• Loan amount: Up to Rs. 50,000 under Shishu, Rs. 50,001 to Rs. 5 Lakhs under Kishore, and Rs. 5,00,001 to Rs. 10 Lakhs under Traun.
• CIBIL Score: There is no CIBIL score requirement to be fulfilled as the government has launched the MUDRA scheme to help people start a new/ grow an existing business. However, there should be no previous defaults.
• Eligible enterprises: Private & Public Limited Companies, Sole Proprietorships, Partnerships, LLPs, NGOs, Trusts, and Co-operative Societies.
• Can be availed by: All non-farm enterprises that are engaged in trading, services, and manufacturing sectors.

MUDRA Loans can be availed of by visiting the partner bank. You can also apply for the loan online by following a few simple steps given below:

• Visit the official website of the eligible bank/NBFC offering Mudra loans.
• Download the MUDRA loan application form from the bank’s website.
• Fill in the application form by mentioning the required details. 
• Attach relevant documents with the filled form.
• Submit the application form and documents online at the official bank’s website. 
• You will get a reference ID/ number. Note it down for future reference.
• The bank’s representative will contact you to proceed with the loan formalities. 
• After the loan application form and attached documents are verified, the eligible loan amount will be approved and disbursed by the bank to your bank account.

Below is the list of documents required for the MUDRA Loan:

For any query regarding Mudra Loans, you can contact the numbers mentioned below:

• 1800-180-1111
• 1800-11-0001

Alternatively, you can also get in touch with the concerned bank to get any specific information about the loan concerning the guidelines of the bank.