Mudra Loans fall under the Pradhan Mantri Mudra Yojana (PMMY), which was launched on April 8, 2015, by the Honourable Prime Minister himself. This provides loans that range up to 10 lakhs and given by commercial banks, RRBS, MFIs, NBFCs, and small finance banks to the non-corporate and micro enterprises (non-farm).

Non-corporate micro-enterprises, units, and entrepreneurs in India form the largest economic sector after agricultural predominance. With high employment demands and scopes, approximately 10 crore such non-corporate units feed almost 50 crores of citizens irrespective of their sizes, disorganized systems, and unpredictable financial conditions. Mudra loans under PMMY aims to provide an organized structure that will eventually lead to making them a more potent source of employment and GDP growth.

There are three schemes or sections introduced under the Mudra Loans in accordance to the growth and development of the micro-unit/enterprise and their funding needs. These are:

  • Shishu
  • Kishore
  • Tarun

Features of Mudra Loans

  • Mudra loans give a maximum loan amount of Rs. 10,00,000.
  • The eligibility criteria reach from any new non-corporate and non-agricultural units to the old and existing ones.
  • The repayment period ranges from 3 to 5 years.
Sections Loan Amount Processing Fee
Shishu A loan up to Rs. 50,000 nil
Kishore A loan from Rs. 50,001 up to Rs. 5,00,000 nil
Tarun A loan from Rs. 5,00,001 up to Rs. 10,00,000 5%

 

Purpose of the Mudra Loans

Apart from providing an organized sector, Mudra loans also aim for:

  • Commercial Transport Vehicle Loans
  • Finance for equipment in micro-units
  • Loans for agriculture-allied non-farm activities/purposes
  • Business Loans for service sector activities
  • Working Capital Loans
  • Loans for commercial purpose tractors, tillers, and two-wheelers.

Here is a detailed and illustrated list of the sectors/units/activities eligible to avail the loans:

S. No   Finance Schemes  Applicable for
1. Food Products Sector/Activities
  • Papad, achaar, jam/jelly making
  • Preservation of Agricultural products at rural levels
  • Day to day catering/canteen services, sweet shops, cold storages and cold chain vehicles, small food stalls
  • Ice, ice-cream, bread, biscuit, bun, etc. making units.
2. Textile Products Sectors/Activities
  • Handloom, power loom, khadi activities
  • Chikan, zari, zardozi works, hand works, and traditional embroidery, dyeing, and printing 
  • Apparel design, knitting, cotton ginning, stitching, and computerized embroidery
  • Products like bags, furnishing, and vehicle accessories.
3. Business Loans 
  • Traders
  • Shopkeepers
  • Service enterprises
4. Transportation Loans (commercial usage for the transportation of passengers/ goods)
  • Auto rickshaws, 3 wheelers, e-rickshaws, taxis
  • Tractor trolleys, tractors, power tillers
  • Two-wheelers
5. Social and Personal Services/Activities
  • Salons, beauty parlors
  • Gymnasiums
  • Tailoring shops, boutiques, dry cleaning 
  • Vehicle (two-wheelers) repairing shops
  • DTP and xerox/photocopying facilities
  • Medicine shops
  • Courier services/agents
6. Equipment for Micro Units Purchase of necessary machinery equipment.  
7. Agriculture Allied Sectors/Activities
  • Pisciculture, beekeeping, poultry, grading, sorting, livestock-rearing, and aggregation agro-industries
  • Fishery, food, dairy, and agricultural products processing services

 

Read More:   The 5-Minute Guide to Creating an Online Business Around Your Lifestyle

Sections under Mudra Loan

  • Shishu

This loan is primarily meant for freshers or entrepreneurs who are looking for start-ups or a newly formed business, is in the process of starting one, or is in their initial stages. This scheme provides a loan for up to Rs. 50,000.

Items covered/requirements to avail this loan are:

  • Machinery and equipment for commercial usage only. 
  • Supplier details and properly stated quotations that justify the needs and functions of the machinery/equipment.
  • Kishore

Primarily meant for business persons and entrepreneurs searching or in need of funding to expand their sectors, this loan provides a maximum amount ranging from Rs. 50,000 to Rs. 5,00,000.

Requirements to avail this loan are:

  • Financial account statement of the last 6 months by an existing banker, if any.
  • A balance sheet of the past 2 years.
  • Estimated balance sheet for 1 year during the loan period.
  • Income/sale tax returns.
  • Any and all sales made before filling or applying for the loan in the same financial year.
  • A report stating the technical and economic viability of the business.
  • Tarun

If the business owner or the entrepreneur meets and matches certain criteria, they become eligible to apply for the third and last scheme of the Mudra loans, Tarun, which sanctions Rs’ loan. 5,00,001 up to Rs. 10,00,000.

Requirements to avail this loan are:

  • Same as Kishore.
  • Minority certificates like SC, ST, OBC, etc.
  • Valid Address proof (anyone from electricity/water bills, passport, ration card, Adhaar card or Voter Id, etc.)
  • Valid Identity proof (anyone from Voter Id, Passport, Adhaar card, Birth certificate, Matriculation certificate, etc.)

List of Documents needed for Mudra Loan

A list of the documents needed to apply for Mudra Loan are as follows:

  • Duly filled application form
  • Two recent Passport sized photographs of the applicant
  •  Proof of Identity (Passport/ Voter ID/ Adhaar card/ Driving license)
  • Address proof (Electricity bills/ Water bills/ Ration card/ Adhaar card)
  • Age proof (Birth certificate/ Matriculation Certificate)
  • Proof of business (Registration Certificate)
  • Self-written business plan
  • Bank statements of the past 6 months (by an existing banker) 
  • Minority certificates (if applicable/needed).

How to Apply for Mudra Loan Online?

Keeping the easy accessibility and the consumer’s abilities in mind, the application process has been kept really simple to reach the maximum numbers of eligible borrowers in the farthest of locations.

A detailed step-by-step process to follow while applying for Mudra Loans online is as follows:

    • Step 1 – This step requires the applicants to keep all the necessary documents readily available before starting the form filling out process. These documents include identity proofs, address proofs, business registration certificate.
  • Step 2 – This step requires applicants to visit the official website of PMMY to register themselves for the Mudra loans and click on the ‘Mudra Loan’ option.
  • Step 3 – After clicking on the option, the link will redirect the applicant to a new page where all the details of the scheme shall be provided, and one shall further scroll down to the link ‘Click Here to Apply’ and click on it.
  • Step 4 – The previous step shall redirect the applicant to a page, where the applicant will need to fill out the contact details such as name, e-mail id, phone number, and start the registration process or if the applicant is a registered user, they would need to click on ‘Login’ option.
  • Step 5 – After successful registration, one can apply for a necessary/applicable loan. The application shall be reviewed by many lenders that will ensure credit support. One also gets the facility of choosing a preferred lender at this stage.

How to Apply for Mudra Loan Offline?

While the online process is simple, hassle-free, and fast, the reality is, a large number of people, to date, are inaccessible to the internet. To reach the maximum number of borrowers from all over the country, Mudra Loans are made accessible to everyone, everywhere. The application form is downloadable and available on the official website, which the applicants need to print and fill. 

A step by step process by which borrowers will be able to apply, register, and avail loans with ease is as follows:

  • The applicant/borrower should visit the desired private sector or commercial bank.
  • Applicants then need to make and submit a self-written business plan.
  • The next step requires the applicants to submit the duly signed and filled Mudra Loan application form.
  • Along with the application form,  applicants would also submit the list mentioned above of mandatorily required documents. 
  • Once the documents are submitted, the bank shall verify them and, in accordance with that, then shall approve the loan. The amount shall be added to the mentioned bank account within specified working days.

Financial Institutions to Apply for Mudra Loan

  • Small finance banks
  • Private sector banks
  • Public sector banks
  • NBFCs
  • Regional rural banks
  • Microfinance institutions

Mudra Loans, with time and its ease of accessibility paired with its simplicity and transparency in providing funds to small sectors and units, makes it the most sought-after financial backing option in the present and near future. The way it helps organize this huge, yet fragmented economic sector makes it more preferable, especially when the unpredictabilities are at its peak. This is that one little push towards a new future that makes a great impact on human lives and leads to a greater good for a bright and promising future.

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