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Pradhan Mantri Mudra Yojana, or Mudra Loan, referred to most commonly, is a scheme launched by Prime Minister Modi on 25th April 2015 to support small business owners by providing them with financial help. Under this loan scheme, small business owners can avail as much as Rs. 10 Lacs and other benefits. This scheme has three categories: Shishu, Kishore, and Tarun. Each category has different specifications serving different needs of the borrowers.

Categories of the Mudra Yojana

Mudra Yojana has the following three categories:

  1. Shishu Mudra Yojana: Shishu Mudra Yojana loan caters to start-ups and new businesses. You can avail up to Rs. 50 thousand under this scheme to kick start your new venture. 
  2. Kishore Mudra Yojana: Kishore Mudra Yojana helps the businessmen in the second stage of the business, i.e., the period after the setting up of the business. Loan availed under the Kishore scheme helps business owners expand their business and purchase raw material and heavy machinery or equipment. This scheme ensures that the businesses keep their cash flow intact while expanding. You can avail of Rs. 50 thousand to Rs. 5 lacs under this category.
  3. Tarun Mudra Yojana:  It aims to aid businesses or enterprises that are already well-established but need finances. You get to avail yourself of Rs. 5 Lacs to Rs. 10 Lacs from this category.

Eligibility for the Mudra Yojana

Mudra loan has the minimum eligibility criteria as follows:

  1. You must be an Indian citizen to avail yourself of Mudra Yojana
  2. At the time of loan application, you must be of 18 years of age
  3. Mudra loan extends financial assistance only to non-farm enterprises. This includes trading, manufacturing, or the service sector
  4. Businesses requiring loans up to Rs. 10 Lacs can avail of loans under Mudra Yojana.

Steps to Apply for Mudra Loan Online

As per the Reserve Bank of India’s instructions, all the government authorized banks can grant Mudra Loan to eligible applicants. Accordingly, you can apply for the loan online easily by simply following the steps listed below:

  1. Visit the bank’s official website from – https://www.mudra.org.in/Home/PMMYBankersKit where you wish to avail of a Mudra loan and download the Mudra loan application form.
  2. Duly fill out the Mudra loan application form with the correct information. 
  3. Upload the form and the scanned copies of the required documents. 
  4. A bank employee will contact you to verify the information provided by you in the application form. This can be considered the initiation of the loan process. 
  5. After verifying the documents and information, the bank will complete all the formalities. Once this is done, the bank will disburse the loan.

Documentation Required for the Mudra Yojana

To avail of the Mudra Loan, you need to provide the following documents to the bank:

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Application form:

Duly filled out Mudra loan application form along with passport size photos

Identity and Age proof:

  • Aadhaar Card

  • Pan card

  • Driving license

  • Voter’s ID

  • Passport

  • Any certificate issued by the state government

Address proof:

  1. Aadhaar card 

  2. Voter’s ID 

  3. Driving Licence 

  4. Passport

  5. Utility bill of the last 3 months

Business proof

  1. Proof of ownership

  2. Business address proof

  3. Proof of business establishment

Caste certificate

  1. Caste certificate if belonging to the SC or St categories 

  2. Any other special category certificate

Bank statements

  1. Self-employed individuals or business people need to provide their income certificates

  2. Bank statements of the last 12 months from the time of loan application

IT Documents

Form 16 of the previous 6 months 

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Mudra Card

Even though Mudra Yojana is a government scheme, you can avail of it at the government authorized banks and NBFCs. For the ease of withdrawal of the Mudra loan, MUDRA has created a new product called “MUDRA Card,” a Debit card provided on the RuPay network that delivers hassle-free credit flexibly for working capital limit. Mudra card may be used as a cash credit or an overdraft, and it’s as easy to use as a debit or credit card. The loaned funds may be withdrawn from any ATM or credit card swiping machine at a point of sale. You may also make your purchase at any POS machine or on e-commerce websites.

Which enterprises are eligible for Mudra Loan?

Mudra loans can be availed only by the non-farm relating enterprises. Some of them are listed below:

  1. Food production and packaging sector
  2. For the purchase of the transport vehicle that transports both commodities and persons
  3. Personal, social, and community service activities
  4. Traders and retailers can get loans for their businesses
  5. Textile goods and activities are a sector with a lot of opportunities
  6. Agriculture-related (equipment) endeavours
  7. Micro Units Equipment Financing Program

Features and Benefits of the Mudra Yojana

Following are the features and benefits of the Mudra yojana:

  1. Loans availed under Mudra Yojana are unsecured. It means that you do not have to provide any collateral to avail them. 
  2. It provides financial aid to small-scale businesses or MSMEs. 
  3. As per your financial requirement, you can choose from the Shishu, Kishore, and Tarun categories of the Mudra Yojana. 
  4. The tenure for the Mudra Yojana is up to 5 years. 
  5. There is no processing fee for all three categories while availing loan under Mudra Yojana. 
  6. Banks do not levy any penalty on the borrowers for foreclosing the loan before the pre-decided tenure ends. 

Conclusion

The Government of India introduced Mudra Yojana to develop small-scale non-farm related businesses in setting up and expanding their business. These loans have government backing that allows borrowers to avail of the loan without any processing fee and with less documentation; as per your financial needs and the nature of the business, you can choose to avail loan from either of the Shishu Kishore and Tarun categories of the Mudra Yojana.

Mudra Loan Online Apply FAQs:

1. Can artists avail loan under Mudra Yojana?

Yes, artists can avail loans under Mudra Shishu Yojana.

2. Do borrowers get subsidy on loans availed under Mudra Yojana?

No, there is no provision of subsidy on the loans availed under Mudra Yojana.

3. How can we repay Mudra Loan?

The Terms and conditions of the repayment of the Mudra loan are determined a the time of loan application. Factors such as loan amount, success of a business and the cash flow works as a determiner in the mode of repayment.

4. Is PAN card mandatory to avail Mudra loan?

No, PAN card is not mandatory to loan avail under Mudra loan.

5. What is the rate of interest on the Mudra loans?

Rate of interest regulated and deregulated as per the Reserve Bank of India
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