Mudra Loan Documents

What is a Mudra Loan?

Mudra loan or the Pradhan Mantri Mudra Yojana is a scheme launched by Prime Minister Narendra Modi on 25th April 2015. This scheme provides financial aid to small and middle scale businesses from rural areas. Even though the scheme explicitly targets businesses in rural areas, it does not provide loans for agriculture. Mudra Yojana cannot be obtained directly from the government that administers Pradhan Mantri Mudra Yojana. Instead, it can be availed from any government bank or government authorized non-banking financial company or NBFC.

What is the eligibility to avail of a Mudra loan?

Mudra Yojana financial aid is available in three categories. Depending upon the category, its eligibility criteria and the amount it avails changes. Following are the three categories of the Mudra Yojana and their eligibility criteria:

  1. Shishu Mudra Yojana: The eligibility criteria for this category are only limited to new businesses or small-scale businesses. If you fit into this category, you can avail up to Rs. 50 thousand under this scheme.
  2. Kishore Mudra Yojana: It extends its benefits to the businesses in their second stage and is looking to expand their business. In addition, you can obtain a loan to purchase the raw materials or the machinery and equipment required for the businesses. Under Kishore Mudra Yojana, you can acquire Rs. 50 thousand to Rs. 5 lacs. 
  3. Tarun Mudra Yojana: Tarun Mudra Yojana is availed to those businesses that are well established. You can avail of this loan to keep the cash flow in your business or even to expand it even further. Businesses can get financial aid from Rs. 5 Lacs to Rs. 10 Lacs. 

All three Mudra Yojana can be vailed only by Indian citizens above 18. The tenure for all the loans availed under Mudra Yojana is 5 years. This loan is available to only those in the trading, manufacturing, or service sectors.

What documents are required for Mudra Loan?

  1. Since Mudra yojana cannot be availed directly from the government of India, but from the government authorized banks and NBFCs, the documents required can vary from institution to institution. However, the following is the essential list of the documents that you are to provide to avail the Mudra Yojana:
  2. Application form:
    1. Applicants need to submit a Duly filled out Mudra loan application form along with passport size photos to the bank or NBFC of their choice.
  3. Identity and Age proof: 
    1. Applicants need to provide any of the following documents stating their identity and age at the time of loan application. 
    2. Aadhaar Card
    3. Pan card
    4. Driving license
    5. Voter’s ID
    6. Passport
    7. Any identity proof certificate issued by the state or central government.
  4. Address proof:
    1. Applicants need to provide the following documents as their home address proof.
    2. Aadhaar card 
    3. Voter’s ID 
    4. Driving Licence 
    5. Passport
    6. Utility bill of the last 3 months from the date of the Mudra Loan application
  5. Business proof:
    1. Applicants need to provide the following documents for the verification of their business. 
    2. Proof of ownership such as deed documents 
    3. Business address proof includes the utility bill of the previous 6 months at the time of loan application.
    4. Proof of business establishment can be shown in a business deed or any document mentioning the business venture. 
  6. Caste certificate:
    1. Applicants need to provide caste certificates only if they belong to the reserve categories or with special provisions under Mudra Yojana.
    2. Caste certificate if belonging to the SC or St categories. 
    3. Any other special category certificate
  7. Bank statements:
    1. Applicants should provide personal bank statements if availing under Shishu Mudra Yojana. If the loan is availed under the Kishore Mudra Yojana or Tarun Mudra Yojana category then, only business and personal transactions are required. 
    2. Self-employed individuals or business people need to provide their income certificates.
    3. Bank statements of the last 12 months from the time of loan application
  8. IT Documents
    1. Form 16 of the previous 6 months was verified from the CA.

Mudra Loan Documents FAQs:

1. Are loans availed under Mudra Yojana unsecured?

Yes, loans that you avail of under Mudra Yojana are unsecured loans. It means that you do not have to provide any collateral for availing the loan. In addition to this, you do not have to present any guarantor.

2. What are the charges about the loans availed under Mudra Yojana?

When you avail loan under Mudra Yojana, you are not required to pay any processing fee. There are also no foreclosure charges on the Mudra Yojana loan. It means that you can prepay the loan or close the loan before the term end without having to pay any penalty on it.

3. What is Mudra Card?

Even though the Mudra Yojana is a government program, it may only be used at government-approved banks and NBFCs. MUDRA has launched a new product called "MUDRA Card," a Debit card issued on the RuPay network that provides hassle-free credit in a flexible method for the working capital limit to make it easier to withdraw the Mudra loan. Mudra card may be used as a cash credit or an overdraft, and it's much like a debit or credit card to use. You can withdraw the borrowed money from any ATM or point-of-sale credit card swiping machine. You can make a purchase at any POS machine or through e-commerce websites.

4. What are the sectors for which you can avail Mudra Yojana loan?

Following are the enterprises or the sectors for which you can avail of the Mudra Yojana Loan: The sector of food produce and packaging For the purchase of the transport vehicle that transports both commodities and persons Equipment or the machinery required for Personal, social, and community service activities Traders and retailers can get loans for their respective businesses. Textile goods and activities are a sector with a lot of opportunities. Agriculture-related (equipment post-harvest) endeavors Micro Units Equipment Financing Program

5. Can the large-scale businesses avail loans under Mudra Yojana?

No. Mudra Yojana is explicitly curated to cater to small-scale businesses or MSMEs.