Mudra Loan Scheme, Eligibility, Interest Rate, Advantages & Benefits

Mudra Loan Scheme:- The Pradhan Mantri Mudra Yojana (PMMY) provides MUDRA Loans. The Micro-Units Development and Refinance Agency is known by its acronym, MUDRA. Under this scheme, borrowers falling under the Sishu, Kishor, and Tarun categories can apply for business loans ranging from Rs. 50,000 to Rs. 10 lakh. Micro Units Development and Refinance Agency is what MUDRA is. The Pradhan Mantri Mudra Yojana (PMMY), also known as Mudra loans, was launched in 2015 with the intention of providing small, non-farm, non-corporate businesses with loans up to Rs 10 lakh. The goal of this program was to make business loans easily accessible to small and micro enterprises, which have difficulty obtaining loans.

• One may use these loans for business expansion or to launch a new venture.
• Loans totaling Rs 12 lakh crore have been disbursed under PMMY since its inception.

List of Businesses under the Mudra Loan Scheme

The Mudra scheme provides coverage for the following businesses to engage in revenue-generating activities:

• Mudra funding for Tractors, autorickshaws, taxis, trollies, tillers, goods transport vehicles, 3-wheelers, e-rickshaws, and other commercial transport vehicles can all be bought with machinery and equipment.
• launching companies that provide services, like hair salons, fitness centers, tailors, pharmacies, repair shops, dry cleaners, photocopiers, and so forth.
• The manufacturing of papad, achaar, ice cream, biscuits, jam, jelly, and sweets is one aspect of the food and textile product sector’s operations. Another is the rural preservation of agricultural products.
• MUDRA loans are also available for the establishment of stores, service businesses, trading and business ventures, and non-farm revenue-generating activities.
• Micro Unit Equipment Financing Programme: Up to Rs. 10 lakh in maximum loan amount
• Agri-allied Activities: These include activities associated with agribusiness and agriculture, food and agro-processing facilities, beekeeping, poultry farming, pisciculture, sorting, raising livestock, grading, aggregating agro-industries, dairy, fisheries, and other related activities.

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Mudra Loan Scheme Product Types

Three categories of Mudra loan schemes exist: Tarun, Kishor, and Shishu.

Scheme	Amount
Shishu	Up to Rs.50,000
Kishor	Rs.50,000 to Rs.5 lakh
Tarun	Rs.5 lakh to Rs.10 lakh

What is the purpose of the Pradhan Mantri Mudra Loan Scheme?

Yojana MUDRA loans can be used for a number of things, such as generating revenue and jobs. The main justifications for obtaining Mudra loans are as follows:

• Business loans for traders, vendors, shopkeepers, and other service-oriented enterprises
• Finance for equipment for small businesses
• MUDRA cards are the means of obtaining working capital loans.
• financing for automobiles used for transportation
• A Mudra Loan can be obtained for agri-allied non-farm revenue-generating ventures like pisciculture, beekeeping, and chicken farming, among others.
• A Mudra Loan is available to anyone who uses two-wheelers, tractors, or tillers for business use.

Activities Covered Under Mudra Loan

The activities covered by the Mudra Loan are as follows:

• food goods sector
• vehicles for transportation that can move both people and goods
• Activities related to community, social, and individual service
• Business loans for traders and shopkeepers
• The textile industry and its operations
• activities pertaining to agriculture
• Financing Plan for Equipment Micro Units

Eligibility for Mudra Loans

Indian nationals who need up to Rs. 10 lakh for their own business ventures in the manufacturing, trading, or service sectors can apply for a Mudra loan. Microfinance institutions (MFIs), small finance banks, regional rural banks, and banks in the public and private sectors all sell it.

A candidate for a MUDRA Loan needs to fulfill the following requirements:

Minimum age of eligibility	18 years
Maximum age of eligibility	65 years
Who can avail of a Mudra Loan	Loans can be availed by new and existing units
Security or collateral	No collateral or third-party security is required
Institutions eligible to offer Mudra Loan	Public Sector Banks, Private Sector Banks, Micro Finance Institutions, and Regional Rural Banks
Documents required	Proof of identity, proof of residence, application form and passport-size photos

Also Read:- Uttar Pradesh Gram Panchayat Voter List, Digitize India, Digitize India Platform, Online Refer Jobs

What is the Mudra loan interest rate?

The profile of the applicant determines the interest rate for a Mudra loan. A multitude of banks in the public and private sectors offer MUDRA loans. Every lender adheres to a set of rules, and the lender sets the ultimate interest rate at which a loan is given to a candidate. After carefully examining the applicant’s business requirements, this is completed.

The Advantages of Taking a Mudra Loan

The salient characteristics and advantages of a Mudra loan are as follows:

• Financial services and banking are available in both rural and urban areas.
• Start-ups and micro-small enterprises can receive funding
• Low-interest small-dollar business loans are offered.
• Since the government takes on the borrower’s credit guarantee, it will be responsible for any losses if the borrower is unable to repay the amount borrowed.
• This program can help small business owners, including food vendors and retailers.
• In areas where people lack access to basic banking services, this program offers financial assistance.
• Repayment under the scheme may take up to seven years.
• Lower interest rates are available for loans taken out by women.
• Additionally, refinance programs are offered by specific lenders.
• For those who wish to make money through microenterprise activities, there is the Micro Credit Scheme.
• The government’s “Make in India” initiative, which seeks to promote innovation, ease investment, enhance skill development, and create the greatest manufacturing infrastructure in the nation, is coordinated with the Mudra loan scheme.
• There is no need for collateral or security in this scheme.
• This scheme’s borrowing limits the use of the money to commercial use.
• The Mudra Shishu category will be eligible for specific benefits under the Atmanirbhar Abhiyan, the Indian government recently announced. The following are the benefits:
  • Up to Rs. 1,500 crore in relief will be available to borrowers who fall under the Mudra Shishu category.
  • The interest subsidy for Mudra Shishu borrowers is Rs. 1,500 crore.
  • For a year, the Indian government will grant quick recipients a 2% interest rate reduction.

Women Entrepreneurs Can Get Mudra Loans

Under PMMY, the Mudra Yojana offers private and public sector banks, NBFCs, and Micro Finance Institutions (MFIs) collateral-free business loans at discounted or concessional interest rates in an effort to promote women’s entrepreneurship.

Under the Mudra Yojana, the maximum loan amount available to female entrepreneurs is Rs. 10 lakh, with a maximum five-year repayment period. Women are eligible for Mudra loans in the same ways as individuals and businesses. There are no processing fees or foreclosure costs associated with the approved loan amount for female entrepreneurs.

How Do You Apply for a Mudra Loan?

You can download and complete the application form at mudra.org.in by providing all the necessary details. The application procedures used by various banks may vary slightly. You have to go to the bank’s closest branch and turn in the application form, properly filled out, along with the necessary bank paperwork.

Additionally, you have the option to apply online through the bank’s official website by submitting the application form, properly filled out, and any required documentation to the lender. After the loan is approved and the funds are transferred into your designated bank account, it will take 7 to 10 business days for the lender to review and approve the submitted documentation.

• Step 1: Verify that you have all the required paperwork on hand. The primary documents you will require are identification, address, and business proof.
• Step 2: Fill out an application at a lender participating in the MUDRA program.
• Step 3: Send in the necessary paperwork

Documents Required for Mudra Loan Application

The following documents are required for a MUDRA loan:

Documents	Type Documents
Application Form	Duly filled up an application form on the basis of the loan category
Proof of Identity	Aadhaar card, Voter’s ID card, driving license, passport, etc.
Proof of Address	Utility bills (electricity bills, telephone bills, and so on), Aadhaar cards, Voter’s ID cards, passport, etc.
Photographs	2 passport-sized photographs of the applicant
Caste Certificate	If applicable
Other documents	Aadhaar card, Voter’s ID card, driver’s license, passport, etc.

Also Read:- Mahila Samman Saving Scheme

FAQ’s

Q. What is the eligibility for a Mudra loan?

Ans- Any Indian citizen may apply to a bank, MFI, or NBFC to obtain MUDRA loans under PMMY if they have a business plan for a non-farm revenue-generating activity like manufacturing, processing, trading, or the service sector and their credit need is up to 10 lakh.

Q. What are the terms and conditions for the Mudra loan?

Ans- Term Loan: To be repaid according to the cash flow of the business in appropriate installments with an appropriate moratorium period. Limits on OD and CC: Payable upon request. Renewal and Annual Review in accordance with the Bank’s internal policies.

Q. What is the time limit for a Mudra loan?

Ans- The National Credit Guarantee Trustee Company (NCGTC) provides loans under the Mudra Scheme, which are guaranteed by Credit Guarantee for Micro Units (CGFMU). Since the guarantee cover is available for five years, the maximum period for advances made under the Mudra Scheme is 60 months.

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