Mudra loan

A huge number of micro, small, medium and large companies are housed in India. More so than ever, this number is growing in leaps and bounds, which if successful, can contribute greatly to the country’s economy. However, many of these come to a standstill and get stuck due to shortage of funding. To be able to allow smooth flow with the aid of money, the government of India has introduced a scheme called the Pradhan Mantri Mudra Yojana (pmmy). Working under this scheme, enterprises can avail monetary aid in the form of mudra loan and fulfil their career related dreams.

What is the Pradhan Mantri Yojana Scheme?

As stated above, the Pradhan Mantri Yojana scheme was launched only to help Indian small-scale companies grow and reach penultimate success. This scheme was officially launched on 8th April, 2015 and is dedicated to funding several such enterprises. The name ‘mudra‘ is an abbreviation for Micro Units Development and Refine Agency and mainly helps companies from both, the profit as well as the non-profit sector with financing. Any eligible company or individual seeking to avail the mudra loan can get financial help up to the amount of Rs. 10 lakhs. Companies that would ideally be eligible for availing this loan are;

  1. NBFCs (Non-banking financial corporations)
  2. Small finance banks
  3. MFIs (Micro finance institutions)
  4. Commercial banks
  5. RRB’s (Railway recruitment boards)

Type of Industries that Can Apply for Mudra Loan

The below mentioned industries can apply for the Mudra loan;

  1. Shopkeepers
  2. Business vendors
  3. Food production industry
  4. Agriculture sector
  5. Small scale manufacturers
  6. Restoration and repair shops
  7. Handicraftsmen
  8. Service based companies
  9. Truck owners
  10. Self-employed entrepreneurs
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Salient Features of the Mudra Loan:

The following mentioned features of the mudra loan distinguish this scheme over several others offered by the government;

  1. The amount availed by this loan can be used to fulfil the working capital requirements of the availing company
  2. Mainly, is it aimed at serving industries that are engaged in manufacturing, trading and services
  3. Both, existing companies as well as new ones can apply for the pm mudra loan
  4. The tenure of the mudra loan ranges from 3 years to 5 years, depending on what is agreed upon at the time of processing
  5. The mudra website and mudra app are well equipped enough for anyone to be able to directly apply online
  6. Enterprises have complete liberty to utilise the funds obtained via this loan for purchase of equipment, buying machinery, expansion of business, restructuring of business, hiring competent staff, additional working capital and many more
  7. No collateral or additional security via a third party is required
  8. There are three products under the mudra loan scheme, offering versatility to borrowers

Benefits of Mudra Loan

There are several benefits associated with the Mudra loan scheme, some of which are stated below;

  1. No collateral or third party security is needed to avail any of the mudra schemes
  2. The Mudra loan interest rate is very affordable and doesn’t exceed 1% on a monthly basis
  3. Withdrawing the sanctioned amount with the help of a Mudra loan card is very easy without the need of making a physical visit to the bank.

What are the Mudra Loan Products?

The Mudra loan is offered in three different variants, namely, ‘Shishu, Kishor and Tarun’. These are categorized based on the level of development and monetary requirements of the micro company. Once the loan is sanctioned, these funds can then be bifurcated towards capital needs, salaries, additional operating costs, etc. These three products are termed as Mudra loans. Let us take a look at these Mudra loan products in detail.

1. Sishu Yojana

In this category, micro or small business owners have the utmost advantage as they can apply for the amount of up to Rs. 50,000. For those companies that require a small capital to be able to commence their business, the shishu yojana works the best. For being able to successfully apply to this category, the business owners will need to give clear details of their business ideas in addition to quoting the type and quantity of machinery needed for purchase. So much so, that even the machinery supplier’s details would need to be provided. Short of these details, chances of loan approval will be high. No processing fee will be applicable on this product. Required documents for this product would include;

  1. Quotation of all purchases including machinery and equipment
  2. Details of all purchases
  3. Details of supplier/s that will provide machinery and equipment

2. Kishor Yojana

Kishor under the Mudra scheme is a category which is ideal for business owners who have an established business and are in pursuit of expanding it further. Applicants can seek loan amount that ranges from Rs. 50,000 – Rs. 5 lakhs. To be able to successfully apply for Kishor, applicants must submit a completed application form along with required documents which will establish a clarity and status of their company. The documents that will specifically be required for this product under Pradhan Mantri Mudra loan are;

  1. Account statements from an existing banker for the latest six months (if any)
  2. Balance sheet dating from the last two years
  3. Memorandum of Association (MOA) (if any)
  4. Articles of Association (AOA) (if any)
  5. An estimated balance sheet for a one year or the entire tenure of the loan
  6. Account of successful sales in the current financial year, before the application of loan
  7. Income tax/ Sales returns
  8. A report that will demonstrate the technical as well as economic sustainability of the business

3. Tarun Yojana

This, just like Kishor is a Mudra loan scheme that offers financial aid in the form of loan to any small business owners that are looking to expand their business. Borrowers can seek an amount up to Rs. 10 lakhs, provided he or she meets the stipulated eligibility criteria. The Mudra loan documents needed to be submitted under this loan include;

  1. Balance sheet dating from the last two years
  2. A report that will demonstrate the technical as well as economic sustainability of the business
  3. Memorandum of Association (MOA) (if any)
  4. Articles of Association (AOA) (if any)
  5. Account statements from an existing banker for the latest six months (if any)
  6. An estimated balance sheet for a one year or the entire tenure of the loan
  7. Account of successful sales in the current financial year, before the application of loan
  8. Income tax/ Sales returns
  9. Proof of identity (PAN card, Aadhar card, drivers license, voter’s ID, etc.)
  10. Proof of address (Passport, driver’s license, Aadhar card, etc.)
  11. SC, ST, OBC, etc. certificates (if any)

Purposes of Mudra Loan

Micro, small and medium enterprises (MSME’s) play an important role in contributing to the economy of the country. The Mudra loan helps MSME’s by fulfilling the following mentioned purposes;

  1. Commencing a new business
  2. Expanding and growing an existing business
  3. Training as well as hiring of competent staff
  4. Purchasing of machinery
  5. Achieve working capital for business
  6. Purchase of commercial vehicles
  7. Purchase of equipment

Eligibility Criteria of Mudra Loan

MSME’s in both, rural and urban areas of India can apply for the Mudra loan only if they meet the following mentioned criteria;

Eligibility Status

Criteria

Age Limit

18 years – 65 years

Amount of Loan

Shishu Yojana – Up to Rs. 50,000

Kishor Yojana – Rs. 50,000 – Rs. 1,00,000

Tarun Yojana – Rs. Up to 1 Lakh

Type of Industry

Individual occupied in agriculture, fruit and vegetable vendor, Craftsmen, small scale manufacturer, store owner.

Company Status

Shishu – New company commencement

Kishor & Tarun – Expansion of existing company

Tenure of Loan

3 years – 5 years

MUDRA loan Interest Rate:

The interest rate applied on MUDRA loans are based on RBI defined MCLR (Marginal Cost of Lending Rate) with the following break-up.

Up to Rs.50000:

  • Micro Enterprises: MCLR + SP
  • Small Enterprises: (MCLR + SP) + Bank Load

Above Rs.50000 up to Rs.2 lakhs:

  • Micro Enterprises: (MCLR + SP) + Bank Load
  • Small Enterprises: (MCLR + SP) + Bank Load

Above Rs.2 lakhs up to Rs.10 lakhs:

  • Micro Enterprises: (MCLR + SP) + Bank Load
  • Small Enterprises: (MCLR + SP) + Bank Load

Documents Required to Apply for Mudra Loan

Though the documents might differ from the type of product chosen, the following mentioned documents would be the generic requirement when applying for Mudra loan;

  1. Identity proof such as Aadhar card, PAN card, Driver’s license, voter’s ID, etc.
  2. Proof of address such as Aadhar card, passport, utility bills, bank statements, etc.
  3. Passport sized photos of the borrower/applicant
  4. Address proof of enterprise if applicable
  5. Identity proof of license of the enterprise if applicable
  6. Quotation proof of merchandise/equipment/plant to be purchased

Application Procedure for Mudra Loan

Many banks offer the facility of this loan and the Mudra loan application can be applied for following the below mentioned steps;

  1. Visit the official website – https://www.mudra.org.in/ and then download the application form.
  2. Fill this form with accurate details such as name, address, number, and KYC details
  3. The required Mudra loan documents then need to be submitted along with the application form
  4. Additional procedures required by the bank, then need to be fulfilled. (This will differ slightly from bank to bank)
  5. Selected bank will then verify the documents
  6. Loan amount then gets credited to the account post verification
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Why Lendingkart.com for Business Loan?

When it comes to ease of seeking lending facility; we at Lendingkart score over others in a number of ways. We are a non-deposit NBFC in the business of lending providing credit with a range of products:

At Lendingkart, our focus is not on the past antecedents of the prospective borrower, but the potential and the credit risk of our clients with an emphasis on the current cash flows and business growth. We are well endowed with the services of our fin-tech start-up arm, providing an accurate assessment of the creditworthiness of clients through the accumulation of data from various sources and efficient analysis tools. The key factors that make us at Lendingkart the choice destination for our range of loan products are:

  • Though working out of Ahmedabad, Bengaluru and Mumbai at present, the services are extended pan India.
  • Ease of online application in full that takes only a few minutes to complete.
  • Fewer documents are sought.
  • The absence collateral security.
  • Disbursal of loans is the quickest in the industry, which is ensured in three days.

In fine, we at Lendingkart.com aim to provide a seamless credit experience to our clients to conveniently concentrate on the business rather than on the cash flow gaps.

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Mudra Loan FAQs:

1. Can MUDRA loan application form be submitted online?

Yes, you can apply online visiting the official website Mudra loan - www.mudra.org.in, But you need to have proper business plan to apply business loan.

2. Which are the required MUDRA loan documents?

The documentation is simply based on the type of loan applied for.

3. What is the main purpose of MUDRA Loan?

The basic aim being income generation, the purpose of the loan serves:

4. What is the Mudra loan card?

This card is created to make withdrawals of credit easily once loan is sanctioned. It offers flexibility to the borrower as it works like a credit card, which can be swiped as per requirement. The limit on this card is given in the form of an overdraft loan and one can make multiple withdrawals. Lastly, it also helps keeping track of withdrawals digitally to avoid any error.

5. Does MUDRA scheme extend portfolio guarantee?

Yes, under the MUDRA Credit Guarantee Scheme promoted by the Government of India to mitigate collateral and security concerns of the lending institutions.

6. What is MUDRA Credit Plus?

It aims to build a business eco-system by offering the following:
  • Counselling centres for financial literacy.
  • Imparting product knowledge.
  • Oversee credit absorption capacity.
  • The need for products and services.

7. What are the synergies aligned with PMMY?

The major schemes of the Government like Make in India, Stand-Up India and Start-up India are the synergies aligned with the MUDRA loan scheme.

8. What is the normal repayment of MUDRA loans?

The normal term of repayment is 12 to 60 months.

9. What is the processing time of MUDRA loan?

It is normally processed in 24 hours.

10. Do the lenders offer pre-approved MUDRA loans?

Some lenders do offer to existing customers through the MUDRA loan application process.

11. Is there an offline method of availing the Mudra loan?

Yes. Many banks offer this facility so you can visit any one of the private or commercial banks and an executive will guide you through the process.

12. What is the interest rate on Mudra loans?

Reasonable interest rates are levied upon the Mudra loan as per the RBI guidelines. No more than 1% interest on a monthly bases will be charged. However, this is largely dependent on borrower's credit and repayment history.

13. In case the borrower is physically challenged, can he/she still apply for the Mudra loan?

There is no discrimination against physically challenged people and anyone within the eligibility criteria can apply for this loan.

14. Can I apply for the Mudra loan to buy a vehicle?

Yes. However, this is not applicable for private vehicles. Any car, taxi, bus or truck that is bought by the funds availed from the Mudra loan will need to be used only for public transport.

15. For the application process for any of the three products under the Mudra loan, is there a specific format?

Yes. For Shishu Yojana, there is a one page form whereas for Kishor Yojana and Tarun Yojana there is a three-page format.

16. To avail the Mudra loan, will I need to put anything up against the loan amount as collateral?

No. No collateral or third party security is required for availing loan under the pm Mudra yojana.

17. What is the full form of MUDRA?

MUDRA stands for Micro Units Development and Refinance Agency.

18. If I am over 65 years of age, can I avail the Mudra loan?

The maximum age to avail the mudra loan is 65 years. Beyond that, you won't be eligible.

19. What are the different food products in the food industry that can be eligible for availing the Mudra loan scheme?

Units that make pickles, jams, ice-creams, papads, bakeries, sweet shops, cold storage and agricultural produce centres are eligible.


Mudra Loan News:

Over 29.55 Crores loans sanctioned under the Pradhan Mantri Mudra Yojana (PMMY)

Union Minister of State for Finance, Dr Bhagwat Kisanrao Karad in recent meeting informed the Lok Sabha that over 29.55 crore loans have been sanctioned under the PMMY scheme since its inauguration in 2015 and the loans have amounted up to around INR 15.52 lakhs crores. Under the PMMY scheme the companies that fall under the Micro Small and Medium Enterprises sector can avail credit upto INR 10 lakhs for their activities by the Member Lending Institutions (MLI) of the scheme.

Out of the 29.55 Crore loans, around 6.8 Crore loans amounting to INR 5.2 lakh crores has been provided to startup companies and new entrepreneurs as these companies require a base fund to handle even its basic operating costs and the loans under the Pradhan Mantri Mudra Yojana (PMMY) and Stand-Up India Scheme (SUPI) which are implemented by the Department of Financial Services provide them the required boost they need to sustain their businesses.

Updated Date: 17-08-2021

Mudra loans: Around 87% of the loan amount was sanctioned in first quarter of FY22

Pradhan Mantri Mudra Yojana (PMMY), the scheme PM Modi launched in 2015, lays emphasis on Entrepreneurship and self-employment. Under this scheme around 87 percent of the total loan amount that was sanctioned in the first three months of the financial year (FY) 2021-22 has been disbursed. In the period from April 1 to July 9 of 2021a total of 76,69,969 applications were received involving Rs.44225.74 crores of loan amount. Out of this, a sum of Rs 38668.03 crores has been disbursed in the period from April 1 to July 9.  Mukesh Mohan Gupta, President of Chamber of Indian Micro, Small & Medium Enterprises (CIMSME) told Financial Express Online that lthough people were skeptical in starting new business during the lockdown period, yet a considerable amount of loans were sanctioned to Micro Entrepreneurs.

Updated Date: 16-07-2021

Fraud in the name of PMMY

This is a real story of how a man of Mumbai, was duped of Rs.55,000 when he fell prey to a cyber fraudster. On 15th of March, a person called Priya Mishra rang Pramod Jadhav.  She told him that her department (PMMY) has started a loan distribution scheme between Rs.50,000 to Rs. 20,00,000 exclusively for women. Initially, Priya asked Pramod to pay Rs.1000 as processing fees for the loan and he was also asked to submit the Aadhar Card and Pan Card of his wife which he did. The very next day Priya asked him to pay the insurance charges of Rs.18,150 and then demanded Rs. 36,200 as loan approval fees.

Jadhav was then asked to pay 6% of the loan amount as GST that was equal to Rs. 1.2 lakh. At that point Pramod refused to pay more money and asked her to take that money from the loan amount. When Priya denied, Pramod demanded his money back from her.  Since then she stopped talking to him. Sensing something fishy Jadhav wrote to the Prime Minister’s office. A few days later they clarified that it was a fraud. Jadhav then lodged a complaint in the Agripada police station.

Updated Date: 27-06-2021