Mudra Loan Interest Rates

Introduction:

MUDRA stands for Micro Units Development & Refinance Agencies Ltd., one of India’s largest banks. MUDRA’S mission is to provide small entrepreneurs with finance, technology, and business know-how. Microcredit is a great way to start businesses that support local communities while also providing stable jobs for people in poverty. The fact that lending money to people who need it can positively affect economies worldwide, primarily through benefiting whole communities because of the profits made from these loans, cannot be denied.

With this in mind, it is now possible to loan money to someone who needs it at relatively low-interest rates due to the MUDRA scheme. The Confederation of Indian Industry (CII), a non-profit industry association committed to the growth of the industry in India, has partnered with the Government of India’s Department of Financial Services to launch a new credit scheme called MUDRA, which was aimed at “encouraging entrepreneurship.” The scheme entails bank loans for tiny businesses, such as small-scale workshops or shops.

CII explained that the central aim of the scheme was to “fast track” financial inclusion in India. They have partnered with the government and established a dedicated agency called MUDRA Bank Ltd to meet this goal. The Government of India hopes that this new initiative will help unemployed youth get into their businesses and use these loans to profit. At the same time, it is also hoped that MUDRA banks will serve as community banks in local areas. The scheme has already been launched, and there are almost 10,000 people currently registered to receive a loan from MUDRA banks across India.

What Schemes Are Offered Under Mudra Scheme?

MUDRA is an initiative to give loans of up to Rs. 1 crore for small-scale businesses, such as a small-scale workshop, a business for subsistence trade such as food vending or mobile repair shop, a small-scale handicraft shop etc. The funds used for this will mostly be from the Indian government’s Small Industries Development Bank (SIDBI). Still, other funding sources are also available, like bank loans by commercial banks and non-banking financial institutions. 

The types of banks that can offer these loans include nationalized banks, private sector banks, and NBFCs. The three loan schemes under Mudra Yojana:

  1. Shishu: This is the most common loan scheme given to students who wish to start a small-scale business while still studying. You can use this loan amount to start a small-scale workshop, a small shop, or any other type of business that can support them in their studies.
  2. Kishor: This loan is meant for people who currently work but want to start their own business. For example, if someone works in the fields and wants to start a small-scale shop that sells vegetables, they can apply to this scheme.
  3. Tarun: This is a loan given out for people who have been working and making a steady income but still may not have enough money to start up a business.

How To Apply For Mudra Loan?

There are two ways of applying for MUDRA loans: 

1) Online Registering & 2) Offline Registration

(1) Online Registration: This involves applying online at https://www.mudra.org.in/Home/PMMYBankersKit. You can provide financial details such as your passport number, address, and bank account, by registering online. In addition, the registration form states the amount of money you wish to borrow.

(2) Offline Registration: You can also apply for these loans if you do not live in an urban area and would need to go to a nearby city or town to get your loan. In this case, you will have to go to your nearest MUDRA Post Office, where they will take care of the whole process.

Why Is Mudra Loan One Of The Most Preferred Loans?

The interest rate paid on a MUDRA loan is shallow compared to other types of loans, which is why these loans are so popular.

One reason for this is that the loans are given out on a subsidized basis, meaning there will be no cost to you for using them for your business. As a result, you can use the money for any purpose, including paying off debts or making payments to suppliers. There is also no prepayment penalty, which means that you will have absolutely no interest if you decide to repay early.

If you take this route, you will not have to pay any monthly installments or interest. You can decide when the money is paid back and whether you will be paying it back in one lump sum or one at a time.

How Much Mudra Loan Can You Get?

The amount of money that you get from a MUDRA loan depends on many factors, including how much money you qualify for and your business’ profit.

Generally speaking, the larger your business and the more profit it makes, the less loan you will get per unit of money.

The maximum that you can receive per month is Rs. 1 lakh, and the minimum is Rs. 5 lakhs, although some banks offer loans in the region of Rs. 10-20 lakhs, while others offer up to fifty times this amount from their MUDRA scheme.

How Are Mudra Loans Being Used?

At present, business through MUDRA schemes mainly takes place in rural areas of India, as more than half of the country’s population lives in these areas, which makes it easy for small entrepreneurs to access the loans. There are many cases where new workshops or shops have appeared due to working with a local community.

Interest Rates Of Shishu Mudra Loan:

Interest Rate

1 to 12% p.a. onwards

Loan Amount

Up to Rs.50 Thousand

Loan Tenure

Up to 5 years

Processing Fee

Subject to the lender

Interest Rates Of Kishore Mudra Loan:

Interest Rate

8.60 to 11.15% p.a. onwards

Loan Amount

Up to Rs.5 Lakh

Loan Tenure

Up to 7 years

Processing Fee

Subject to the lender

Interest Rates Of Tarun Mudra Loan:

Interest Rate

11.15 to 20% p.a. onwards

Loan Amount

Up to Rs.10 Lakhs

Loan Tenure

Up to 7 years

Processing Fee

Subject to the lender

Conclusion:

The MUDRA scheme can help many people start their own business, but other benefits result. For example, it means that people will not have to rely on others for their livelihood and can make their own choices as to what type of business they want to start. In addition to this, it may also help increase productivity as many people will be able to work together to achieve larger goals. So, if you are in India and are looking for a loan, you might want to consider getting a MUDRA loan.

Mudra Loan Interest Rate FAQs:

1. Why do you think the MUDRA scheme is being implemented in such a big way?

The main reason is that the government is trying to break down barriers to entrepreneurship in India. It wants to make it easier for people to start their own business, and the MUDRA loans are the perfect way of doing this.

2. Does the MUDRA scheme have any limits on the amount of loans you can get?

No, there are no limits for how much money you can get from a MUDRA loan.

3. What are the requirements for getting the loan?

You will have to be an Indian citizen who is below 35 years of age, and your business must have been in place for at least three years.

4. Who can get a loan from the MUDRA scheme?

All of these loans are open to anyone regardless of their religion or caste. They are available to people from urban and rural areas alike.

5. Are there any other benefits for people who get a MUDRA loan?

Yes, there is. For example, they do not have to make any instalments or any other payments when they repay the money. They can also start their business with a minimal amount of capital, and if they turn it around, they can be able to repay the loan back in one lump amount instead of paying it back in instalments over time.