The Pradhan Mantri MUDRA Yojana (PMMY) is an initiative by the Government of India with an aim to provide financial support to non-corporate, non-farm small/micro enterprises. The loans provided under this programme are known as MUDRA loan.
Birth of Pradhan Mantri MUDRA Yojana
The Pradhan Mantri MUDRA Yojana was launched by the Prime Minister of India, Narendra Modi on April 8, 2015, for providing loans up to ₹10 lakhs to existing small businesses and new entrepreneurs.
In order to provide easy access, the Government of India formed the agency called as Micro Units Development and Refinance Agency(MUDRA). These banks were set up to provide services to small entrepreneurs outside the service area of regular banks.
What is a MUDRA Loan?
In order to implement the scheme, the government set up an institution named MUDRA. MUDRA provides refinance to all banks seeking refinancing of small business loans given under PMMY. The basic motive of establishing MUDRA is to extend financial help to small business enterprises involved in trading, manufacturing and service units. The MUDRA Loan scheme has divided its set of products/schemes into 3 categories:
→ Shishu: Loans up to ₹50,000 with no collateral
→ Kishor: Loans above ₹50,000 to ₹5 lakhs
→ Tarun: Loans above ₹5 lakhs to ₹10 lakhs
The interventions have been named as Shishu, Kishor and Tarun to signify the growth/stage and funding requirements of an enterprise. The loan category Shishu means an infant, Kishor means child whereas Tarun means an adolescent.
MUDRA Loan Interest Rates
Loan Category
|
Loan Amount
|
Interest Rates
|
| Shishu
|
Up to ₹50,000
|
Starting from 1% per month
|
| Kishor
|
Above ₹ 50,000- ₹5 lakhs
|
Depending on the creditworthiness of the applicant
|
| Tarun
|
Above ₹5 lakhs- ₹10 lakhs
|
Depends on the case-to-case basis
|
The existing terms of guidelines state that the maximum repayment for a MUDRA Loan is 5 years. However, the repayment period can be shorter if the lender decides.
Mudra Loan Eligibility Criteria
The borrowers must be from any of the following Non-Corporate Small Business Segment:
→ Proprietorship
→ Partnership firms
→ Small manufacturing units
→ Service sector units
→ Shopkeepers
→ Fruit or vegetable vendors
→ Truck operators
→ Foodservice units
→ Repair shops
→ Machine operators
→ Small industries
→ Food processors
→ Other industries in rural and urban areas
Basic Eligibility Criteria for MUDRA Loans
⇒ A citizen of India.
⇒ Non-farm income generating activities
⇒ Non-corporate entities
⇒ Funds to be not used for personal needs
⇒ Small business owners who have not been a defaulter in the past
General Mudra Loan Eligibility Requirements
⇒ The applicant must be at least 23-28 years of age at the time of loan sanction. The maximum age to apply for a MUDRA loan is 65 years at the time of loan maturity.
⇒ He/She must at least have an income of ₹17,000/month or ₹1.5 lakhs or more as annual turnover. The minimum profit after tax should be ₹1 lakh per year and for self-employed, it is ₹2 lakh per year.
⇒ For a salaried individual, the minimum employment tenure should be 2 years or more whereas, for self-employed businessmen, it is 5 years and 3 years’ stability for professionals.
⇒ The applicant must spend at least a year at his/her current residence and must have a relationship of at least 1 year with the bank they are applying.
MUDRA Loan Documents Required
The documents required for a MUDRA loan are:
Take a vehicle loan
|
In order to take a business installment loan
|
Take a business loan group
|
|
PMMY application duly filled
Vehicle Loan application duly filled
2 passport sized photographs
Identity proof
Income proof
Last 6 months’ bank statement
|
PMMY application duly filled
Business Instalment loan application
Identity proof
Income proof
Ownership proof of office and residence
Proof of establishment
Proof of continuity of business
Last 6 months’ bank statement
Qualification proof
Trade references
|
PMMY application
Business Instalment loan or Rural Business Credit application
Ownership of residence or office
Business vintage proof
Last 12 months’ continuity
Last 2 years’ ITR
|
MUDRA Card
MUDRA card is an initiative to provide working capital facility as cash credit arrangement. A Mudra card acts as a debit card which is issued against the Mudra loan account for the working capital portion of the loan. The borrower can use the card in multiple withdrawal from ATM/ micro ATM and also make payment through any Point of Sale machines. The MUDRA card helps in digitalization of MUDRA transactions and building the credit history of the borrower.
Key points to remember
→ The MUDRA card can be used across the country for meeting working capital requirements.
→ The National Payments Corporation of India(NPCI) has separated the BIN/IIN so as to easily track the credit history of the individual.
→ The design of the card is approved by DFS, GOI and NPCI. The banks can customise the card by incorporating the logo and name.
Achievements Under PMMY Since Inception
2018-2019
|
No. Of PMMY Loans Sanctioned
|
12848752 |
| Amount Sanctioned |
69454.93 CRORE |
| Amount Disbursed |
64672.31 CRORE |
*Last Updated on 10/08/2018 **Data as provided on the Mudra.org.in website.
The Pradhan Mantri Mudra Yojana has helped in fulfilling the dreams of many Indian citizens. If you have any doubts or need more information on Mudra Loans or PMMY, you can ask us in the comment section below.
