MUDRA or Micro-Units Development and Refinance Agency was started in April 2015 just to offer financial assistance to micro and small business units under PMMY, also known as the Pradhan Mantri Mudra Yojana. The scheme first began with a total budget of 20,0000 Crores. Mudra is also called Mudra Bank Scheme or Mudra Loan Yojana. All the credit products are provided to borrowers by MUDRA and these credit products all called Mudra loans.
The Mudra loans are categorised into three kinds depending on the requirements of businesses in the small, micro, and medium enterprises (MSME). The three kinds of Mudra loans are Shishu loan, Kishore loan, and Tarun loan. The slight differences are present in the application process and eligibility criteria of banks to apply for these loans. You have only 5 years of repayment tenure to payback the borrowed amount. Small-scale business owners can easily repay the loan amount, as the interest rates are not very high. One of the objectives of developing the Mudra scheme is to improve India's economic condition and growth of India's MSMEs in the future.
The eligibility criteria to avail of Mudra loan are given as follows:
The target of Mudra loans is not only to assist the MSMEs of India but also to assist backward classes, women, tribals, minorities, and Dalits. The Government of India is focusing on these segments as people included in the segments of minorities, tribals, and others often do not get financial aid to start their businesses.
Some sectors are present that act as the eligibility criteria and a business owner should meet this criterion just to apply for a Mudra loan.
The borrowers belonging to the following sectors can get loans under Mudra loans:
|Distinct sectors||The activities that are covered under Mudra loans|
|Food||An applicant can apply for a Mudra loan for buying machinery or setting up a business in biscuits and bread, jam and jellies, and so on.|
|Agriculture||You can be able to begin, establish grow your agriculture-allied business as a dairy farm, a poultry farm, a livestock farm by taking a Mudra loan.|
|Textile||You can get Mudra loans if you are an artisan, who plans to start, expand or establish a business in embroidery, knitting, zari work, and stitching.|
|Service||You have the ability to take a Mudra loan if you set up your salon, dry cleaning, photocopying facility, and chemist shop.|
|Transport||You have the ability to apply for Mudra loans if you buy goods including e-rickshaw, taxi, auto rickshaw, and so on.|
Mudra loan features are designed to ensure that the loan is easily available at banks or institutions with which collaborations have been done. Take a look:
There are three kinds of Mudra loans and they are discussed as follows:
Shishu Loan: The Shishu loan is a child category of Mudra loan and it is suitable for small-sized start-ups. An owner of the micro business can apply for Shishu loan to get a loan amount of at least 50, 000. This loan can assist business owners to get a low amount of capital for starting a business in the sector of MSME. A borrower has to state their business idea with the application form to get Shishu loan.
Kishore Loan: The Kishore loan is ideal for every small business owner, who has to begin their business and is trying to get financial support to have a big enterprise. The business owners can get the loan amount within a range between 50, 000 to 5 Lakhs under Mudra loan category. You have to complete the application process of your Mudra loan and provide the required documents to the bank to show your company's present position for getting approval for Kishore loan.
Tarun Loan: The Tarun loan is included in the PMMY (Pradhan Mantri Mudra Yojana) and it is offered to small scale businesses, which are already established in the small business sector of India. If a small business owner needs cash for expanding their business just to become more successful in the business world, the person can get the Tarun loan. Every business owner can receive the loan amount between 5 Lakhs to 10 Lakhs. You can get such a loan after filling up the application form of Mudra loan. You have to submit ID proofs to show the current position of your company so that you can meet the eligibility criterion to avail for Tarun loan.
Just keep in mind that the loan amount for the above three categories of Mudra loans is fixed. However, the interest rates on these loans can differ depending on the bank from which you are taking the Mudra loan. Check out the documents needed by a wide range of banks before applying for the Mudra loan.
|Purpose||To aid new and existing businesses through funding for expansion or improvement.|
|Quantum||Between 50,000 to 10 Lakhs|
|Loan term||Repayable within 60 months (5 years). This includes repayment holidays of 2, 3 or 6 months as per business sector or nature of business.|
Loan up to 50,000: Margin is NIL
Loan of 50,000 - 10 Lakhs: Margin is 10% of the loan amount
|Security||Hypothecation of the assets for which finance is being taken, no collateral or guarantee required.|
|Interest||At present: 8.40% + 2.75% (1 yr MCLR + 2.75%) = 11.15%|
A co-branded Mudra Card is issued to the applicant and the same can be used across POs and ATMs for cash withdrawal as and when required.
Now get IDFC First Bank personal loan of Rs. 20000 to Rs. 1 Crore at lowest interest rate starting from just 10.49% per annum and the processing fee is 3.5% of the sanctioned limit + GST.
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