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Pradhan Mantri MUDRA Yojana: This Government Scheme Offers Loans Up to 10 Lakh; Know Eligibility Criteria to Get Mudra Loan

Tooba Maher
Tooba Maher

What is Pradhan Mantri MUDRA Yojana?

Pradhan Mantri MUDRA Yojana or PMMY is a Central Government Scheme launched by the Prime Minister, Narendra Modi on April 8, 2015. PM MUDRA Yojana was launched to provide loans up to 10 lakh to the non-corporate, non-farm small/micro enterprises. These loans are called as MUDRA loans under PMMY.

How to avail PM MUDRA Yojana loans?

These loans are provided by Commercial Banks, Small Finance Banks, RRBs MFIs and NBFCs. The borrower can directly approach any of the lending institutions which are mentioned above. They can also apply online @ www.udyamimitra.in

Under the aegis of PM MUDRA Scheme, MUDRA has created 3 products called 'Shishu', 'Kishore' & 'Tarun' to signify the stage of growth or development & funding needs of the beneficiary micro unit or entrepreneur. It also provides a reference point for the next phase of graduation or growth.

Shishu: covering loans upto Rs 50,000/- under PMMY
Kishor: loans above Rs 50,000/- and upto Rs 5 lakh will be covered under PMMY
Tarun : covering loans above Rs 5 lakh - 10 lakh under PM Mudra Yojana

Objective of PM Mudra Yojana:

The objective of PMMY is to promote entrepreneurship among the new generation aspiring youth. It is ensured that more focus is given to Shishu Category Units & then Kishore and Tarun categories.

Within the framework & overall objective of development and growth of micro enterprises sector under Shishu, Kishore and Tarun, the products being offered by MUDRA are designed is such a way, to meet requirements of different sectors or business activities and also business/ entrepreneur segments.

What is Micro Credit Scheme (MCS)?

MCS provides for loans up to Rs 1 lakh finance through MFIs. It is a Refinance Scheme for Commercial Banks or Regional Rural Banks (RRBs) / Small Finance Banks / Non Banking Financial Companies (NBFCs).

Micro Credit Scheme is offered mainly by Micro Finance Institutions (MFIs), who delivers the credit up to 1 lakh, for different micro enterprise / small business activities. However, the model of delivery may be via SHGs/JLGs/ Individuals, the loans are given by the MFIs to individual entrepreneurs for specific income generating micro enterprise or small business activities.

Refinance Scheme for Banks/NBFCs

Various banks like Commercial Banks, Regional Rural Banks, Small Finance Banks and NBFCs are eligible to avail of refinance support from MUDRA for financing micro enterprise activities. The refinance is available for term loan & working capital loan up to an amount of 10 lakh per unit. The eligible banks or NBFC, who comply in the requirements as notified, can avail refinance from MUDRA for the loans provided by them for eligible MUDRA compliant activities under Shishu, Kishore and Tarun categories.

For encouraging women entrepreneursit is likely that the financing banks or MFIs may consider extending additional facilities, such as interest reduction on their loan. Presently, MUDRA extends a reduction of 25bps in its interest rates to MFIs / NBFCs, who are giving loans to women entrepreneurs.

Aim of MUDRA loan

Mudra loan is extended for different purpose which helps in income generation & employment creation. The loans are extended mainly for:

  • Business loan for vendors, shopkeepers, traders, & other service sector activities

  • Transport Vehicle loans for commercial use only

  • Equipment Finance for Micro Units

  • Working capital loan by MUDRA Cards

  • Loans for agri-allied non-farm income generating activities, like pisciculture, bee keeping, poultry farming, etc.

  • Tractors, tillers and two wheelers used for commercial purposes only.

What is a MUDRA Card?

MUDRA Card is a debit card issued against the MUDRA loan account, for working capital portion of the loan. The borrower can use MUDRA Card in various drawals & credits, for managing the working capital limit in cost-efficient manner & keep the interest burden minimum. MUDRA Card helps in digitalization of MUDRA transactions & to create credit history for the borrower. It can be operated across the country for withdrawal of cash from any ATM or micro ATM. It can also make payment through any ‘Point of Sale’ machines.

To know Eligibility click here.

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