MUDRA Loan , Benefit , Eligibility and Documents


Fincrif India

Aug 21

06:00 AM

The Pradhan Mantri MUDRA Yojana (PMMY) is a programme that offers Micro-Units Development and Refinance Agency (MUDRA) services. The programme, which was introduced in 2015, enables you to apply for business loans of up to INR 10,00,000 depending on the various MUDRA Loan Programme categories.

The Modi administration has initiated numerous programmes and campaigns in an effort to create a "Atma Nirbhar Bharat." One of the most well-known initiatives to support the development of domestic enterprises is Make in India. The Pradhan Mantri MUDRA Yojana was created in this manner. This programme, which was introduced in 2015, has shown to be very effective. The PMMY initiative has provided loans of 15.52 lakh crore (INR) to approximately 29.55 crore borrowers over the past six years since its inception. Everyone in the society is treated equally under the plan. The MUDRA Loan programme and its elements are discussed in this section.

What is a MUDRA Loan? 

The Pradhan Mantri MUDRA Yojana (PMMY) is a programme that offers Micro-Units Development and Refinance Agency (MUDRA) services. The programme, which was introduced in 2015, enables you to apply for business loans of up to INR 10,00,000 depending on the various MUDRA Loan Programme categories. The maximum amount that any public sector bank, regional rural bank, cooperative bank, private sector bank, microfinance institution, non-banking finance company (NBFC), or foreign bank may lend to a small borrower for a non-farming business is INR 10 lakh.

Types of MUDRA Loan ? 

Depending on the finance requirements of the micro-unit or the entrepreneur, the government has divided the Mudra loans into three categories. The loans fall into the following categories:

Shishu Loan MUDRA

For non-farming endeavors, you may be eligible for up to INR 50,000 via the MUDRA Shishu Loan. In order to finance other operational costs or the purchase of small-scale gear, Shishu Loan works effectively for emerging businesses. Existing firms may also apply for the loan for less significant costs like remodeling or facility expansion. The MUDRA Shishu Loan is open to microbusinesses, sole proprietors, owners of commercial vehicles, and vendors of fruits and vegetables, among other applications. Important characteristics include a repayment period of up to 7 years, no minimum loan amount, no need for collateral, and no processing fees.

Loan from MUDRA Kishor

From 50,000 to 5,000 Indian rupees is the range of loan amounts provided by the MUDRA scheme under the Kishor Loan category. The larger loan amount can be used by businesses to finance everyday operations, heavy equipment purchases, and the purchase of commercial vehicles for transportation, among other things. Kishor Loans are open to businesses that offer personal services like neighborhood groceries, salons, courier services, pharmacies, and tailoring shops.

Loan MUDRA Tarun

With loan amounts ranging from INR 5 Lakh to INR 10 Lakh and a 3 to 5 year payback duration, Tarun Loans are a subcategory of MUDRA Loan. Both existing and startup enterprises are eligible to apply for the loan. Younger companies, such as start-ups, could need a lot of working capital. Older businesses may use the credit to upgrade, finance office expansion, make essential operational purchases, etc.

Benefit of MUDRA Loan 

The advantages of a MUDRA Loan are as follows:

  •  Accessibility

You can use the banking and financial services offered by the PMMY scheme regardless of whether you live in an urban or rural region. Financial assistance is given to people living in rural locations without access to basic banking services.

  • The business size has no minimum or maximum

Startups, small firms, and microbusinesses can all get financial support.

  • Greater Loan Amounts

MUDRA Loans have a maximum sum of INR 10,00,000, allowing you to access greater loan amounts if necessary while also being able to access smaller loan amounts for smaller firms.

  • No collateral is required

You do not need to provide collateral to obtain MUDRA Loans, in contrast to private business loans.

  • Guarantee of Credit

To address the problems posed by the non-collateral requirement and give lending institutions some peace of mind, the government established the "Credit Guarantee Fund for Micro Units" or CGFMU Funds.

  • Initial capital for a new company

The programme can help people who want to use inexpensive enterprises to generate a second income. You can launch a side business with the help of a microcredit programme that grants credits up to INR 1 lakh.

  • Reasonably Low Interest Rates

The MUDRA programmes have low interest rates that make loan repayment flexible and cost-effective.

  • Lengthened Repayment Term

With significantly longer loan terms of up to seven years, borrowers can comfortably repay the loan.

Eligibility Criteria for MUDRA Loan 

If you are: you may submit an application for a MUDRA Loan.

  • Indian national 

  • Between the ages of 18 and 65 at the final EMI repayment

  • Preparing to launch a company in non-agricultural activities that will need a loan of less than INR 10 lakhs.

Documents Required for MUDRA Loan 

The list of paperwork that must be submitted with your MUDRA Loan application is as follows:

  • Properly completed application for a Mudra Loan. 

  • Identity proofing documents for all applicants (in the event of joint loans), including Aadhaar, PAN, driving licences, passports, voter identification cards, and government-issued photo IDs.

  • Evidence of residence, such as a recent utility bill, Aadhaar, or voter registration 

  • ID, passport, and bank account statement for each applicant (in the case of joint loans).

  • (Licences, registration certificates, deed copies, etc.) are acceptable forms of identification and proof of address for businesses.

  • Most recent images of the application or applicants.

  • Any necessary evidence of minority.

  • Examples of documentation for the need for a loan include vendor information, equipment quotes, etc.

How to apply for MUDRA Loan 

In both the public and private sectors, you can apply for a Mudra Loan online or offline. You merely need to complete a form (either on the bank's website or at your local branch) with information regarding the eligible Mudra Loan category under which you need the loan, facts about your commercial enterprise, and the amount of money you need from the loan. When you apply for a loan, the bank verifies it. The bank then credits the funds to your brand-new Mudra Loan account and issues a Mudra Debit Card after it has been confirmed.

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