Mudra Scheme (2024), Loan Limit, Interest Rates, Objectives and Eligibility

Mudra Scheme:- Small and medium-sized enterprises frequently find it difficult to obtain bank loans because they lack the necessary collateral or money to cover the interest. In the end, fostering the expansion of these companies will boost the economy. A financial initiative called the Mudra Yojana aims to assist micro units and provide them with sufficient funds to grow their businesses. On April 8, 2015, the government started the Micro Units Development and Refinance Agency, or Mudra Bank, program as part of the Jan Dhan Yojana.

Details

The Government of India’s main program is the Pradhan Mantri Mudra Yojana (PMMY). The program enables income-generating microenterprises operating in the manufacturing, trading, or service sectors—including those involved in agriculture-related industries like dairy, beekeeping, or poultry—to get microcredit or loans up to Rs. 10 lakhs. The Scheme offers financial support to non-corporate, non-farm sector income-generating activities of micro and small businesses, which is extended by Member Lending Institutions.
Millions of sole proprietorships and partnerships operating as small manufacturing, service sector, retail, fruit and vegetable vendors, truck drivers, food-service operators, repair shops, machine operators, small industries, artisans, food processors, and other businesses make up these micro and small entities.

The loans under Pradhan Mantri Mudra Yojana can be availed through eligible Member Lending Institutions (MLIs), which include:

• Public Sector Banks
• Private Sector Banks
• State-operated cooperative banks
• Rural banks from the regional sector
• Micro Finance Institution (MFI)
• Non-Banking Finance Company (NBFC)
• Small Finance Banks (SFBs)
• Other financial intermediaries approved by Mudra Ltd. as member financial institutions

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Objectives of the Mudra Scheme Plan

There were several objectives for the Mudra Scheme’s implementation when it was first proposed. The most well-known ones are:

• to establish criteria for financing micro and small businesses.
• must first register, then regulate, all microfinance institutions and associated enterprises.
• to continuously assist small businesses in growing.
• to support low-income communities in starting and growing their enterprises.
• to assist in lowering the cost of financing for the unbanked and to facilitate their access to credit.
• should give SC/ST borrowers priority when making loans.
• to oversee all microfinance organizations involved in manufacturing, services, and trade.

Loan limit and interest rates under the Mudra Scheme

The loan limit and interest rates under this scheme vary based on the financing choices made available, taking into account the stage of growth of the business applying for the loan. The following are the appropriate rates and limits:

• Shishu: A loan with a 50,000 rupee maximum. The bank will choose the interest rate depending on the plan requirements and the applicant’s credit history. The bank will decide how long you have to reimburse the loan.
• Loan amounts for Kishore range from Rs 50,000 to Rs 5,00,00. The bank will choose the interest rate depending on the plan requirements and the applicant’s credit history. The bank determines how long the loan must be repaid.
• Loan amount for Tarun: Rs 5,00,000 to Rs 10,000,000. The bank will choose the interest rate depending on the plan requirements and the applicant’s credit history. How long a loan needs to be repaid is decided by the bank.
• There are eighteen banks in total: twenty-one public, thirty-six regional rural, eighteen private, thirty-five non-banking financial companies (NBFCs), twenty-five microfinance institutions (MFIs), forty-seven NBFC-MFIs, fifteen co-operative banks, and six small finance banks. Are. The decision to repay this debt has not yet been made. The plan calls for ‘Shishu’ to supply 60% of the loans, with the remaining 40% coming from the ‘Kishore’ and ‘Tarun’ programs.

With the Mudra Scheme, what purposes are the loans eligible for use?

This scheme’s loans can be used for the following purposes:

• Loan for commercial vehicles.
• Transport car rental.
• Loan for working capital.
• A loan for equipment and machinery.
• loans for non-farm agribusiness ventures that generate income.
• loans for businesses to dealers and retailers.

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Eligibility of the Borrower

All Scheduled Commercial Banks, Small Finance Banks, Regional Rural Banks, NBFCs, MFIs, and Urban Co-operative Banks will provide Mudra loans, as defined by the Pradhan Mantri Mudra Yojana, to any non-farm income-generating business involved in trading, manufacturing, or services with credit needs under Rs. 10 lakhs.

In essence, any individual seeking a microunit loan of less than Rs. 10 lakh is eligible for one. All of the aforementioned institutions as well as the Udyamimitra webpage will have application forms for the plan available. This application needs to be sent in with the following paperwork:

• Verification of identification
• Identity and address verification for the company (with pertinent licenses and certificates)
• Proof of category, if any
• Accounts Statement over the last six months
• income tax returns and balance sheets for the previous two years
• Evidence of a company’s existence, like a partnership agreement or memorandum of association Act

In addition to the aforementioned documents, the banks of applicants may request additional documentation as needed. The banks are prohibited from requiring any collateral and from levying processing fees. The loan has an extended five-year payback period. This makes it clear that no applicant should have a credit history that includes nonpayment to any financial institution.

Business Sectors and Services Covered under Mudra Scheme

An example of a list of business activities and services that qualify for Mudra loans is provided below:

• Business owners who buy transport vehicles, such as taxis, e-rickshaws, three-wheelers, auto-rickshaws, and small goods transport vehicles, to move both people and products.
• Tractor trolleys, power tillers, two-wheelers used for business purposes, and tractors can all be financed under Mudra Loans.
• Loans under the Mudra Yojana are available to business owners that operate hair salons, fitness centers, beauty salons, tailoring shops, boutiques, dry cleaners, medicine shops, bicycle and motorcycle repair shops, courier services, DTP and photocopying facilities, etc.
• Under the Mudra Yojana, business owners engaged in achaar, papad, sweet shop, jam/jelly, small-service food stalls, daily catering or canteen services, ice cream and ice-making units, cold storages, bread and bun manufacturing, biscuit making, etc., are eligible to apply for loans.
• Mudra Loans are available to entrepreneurs engaged in the following activities: handlooming, khadi work, power looming, traditional dyeing and printing, traditional embroidery and handwork, apparel design, computerized embroidery, cotton ginning, stitching, and other textile non-garment products like bags, furnishings, and car accessories, among others.
• Mudra Loans are available to help “agriculture-related activities, such as beekeeping, poultry, livestock rearing, aggregation agro-industries, fisheries, dairy, food & agro-processing, agri-clinics, and agribusiness centers, etc., and services supporting these.”

Modifications to the Lending Objective in the Mudra Scheme

The minister of finance promised to supply INR 1.22 lakh crores under the Mudra Yojana in order to assist and revitalize MSMEs in the Budget 2016–2017. This lending target was not only met but significantly exceeded. As a result of the previous achievement, the union government chose to quadruple the Mudra Yojana’s lending aim. Accordingly, INR 2.44 lakh crores would be the goal.

Emphasis on Specific Segments

Though the loan objective has been increased, the Finance Minister stated that women, members of the lower classes, minorities, Dalits, and tribal people—groups who have historically not been given enough opportunities to obtain funding for their businesses—will be the main focus.

Mudra Loans Interest Rates

Bank	Interest Rate	Loan Amount	Tenure
State Bank of India	As per bank guidelines	Maximum Rs.10 lakh	1 to 5 years
UCO Banks	8.85% p.a. onwards	Maximum Rs.10 lakh	At the discretion of the bank
Bank of Baroda	9.65% onwards	Maximum Rs.10 lakh	1 to 5 years
Union Bank of India	7.30% p.a. onwards	Maximum Rs.10 lakh	1 to 7 years

Application Process

Online

The following are the pre-requisites for the enrolment process:

• ID Proof
• Address Proof
• Passport size photograph
• Applicant Signature
• Proof of Identity / Address of Business Enterprises
  • Step 1: Find the Udyamimitra portal on the PM MUDRA official website.
  • Second step: Select “Apply Now” for a Mudra loan.
  • An OTP is created in Step 4 once the applicant’s name, email address, and mobile number are input.
  • An OTP is created in Step 4 once the applicant’s name, email address, and mobile number are input.
• Following Accomplished Registration
  • Fill in your professional and personal information in step one.
  • Step 2: Apply online at the “Loan Application Centre” or select one of the hand-holding organizations if you need help with project proposals, etc.
  • Step 3: Choose between Mudra Tarun, Mudra Kishore, and Mudra Shishu as the needed loan category.
  • Step 4: The applicant next has to choose the industry category (manufacturing, services, trading, or activities related to agriculture) and fill out the business information, including the firm name and activity.
  • Step 5: Fill in the extra fields, including owner information, present banking and credit arrangements, proposed credit facilities, estimated future expenses, and preferred lender.
  • Step 6: Enclose any necessary paperwork, such as the applicant’s photo, signature, proof of identity or business enterprise address, and ID and address proof.
  • Step 7: Upon submission of the application, an Application Number is generated; this should be noted for future reference.

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FAQ’s

Q. What is Mudra’s maximum limit?

Ans- Under the Pradhan Mantri Mudra Yojana, a government of India initiative, small borrowers can obtain loans up to Rs. 10 lakh for non-farm revenue-generating enterprises from banks, MFIs, and NBFCs.

Q. Under what bank does MUDRA fall?

Ans- The Mudra. The Government of India (GoI) established the Micro Units Development & Refinance Agency Ltd (MUDRA) against the aforementioned context. Initially, MUDRA was established as a fully owned subsidiary of the Small Industries Development Bank of India (SIDBI), which provided all of the capital.

Q. Do MUDRA loans have no interest?

Ans- The interest rate on a Mudra Shishu loan varies from 1% to 12% annually. The RBI has directed “commercial financial institutions” that offer Mudra refinance to keep interest rates at MCLR/base rate.

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