Wednesday, 14 March 2018

MUDRA Loan | Pradhan Mantri MUDRA Yojana (PMMY)

MUDRA Loan | Pradhan Mantri MUDRA Yojana (PMMY)

MUDRA Loan | Pradhan Mantri MUDRA Yojana (PMMY)

Micro Units Development and Refinance Agency Ltd. (MUDRA) is a financial institution set up by Government of India for development and refinancing micro units enterprises. The main objective of Mudra is to provide funding to the unfunded non-corporate, non-farm small business sector through various financial institutions like Public Sector Banks, Regional Rural Banks, Private Banks, Co-operative Banks, Foreign Banks, NBFCs, and MFIs. In this post, let us take a look at how to apply for Mudra loan under Pradhan Mantri MUDRA Yojana (PMMY).

MUDRA Loan | Pradhan Mantri MUDRA Yojana (PMMY)

Mudra is a refinancing institution. Mudra does not lend directly to the micro enterpreneurs/individuals. Mudra provides refinance support to banks and microfinance institutions for lending to micro and small enterprises whose credit needs are below 10 lakh. Mudra provides refinance to micro-business under the scheme of Pradhan Mantri MUDRA Yojana (PMMY). Pradhan Mantri MUDRA Yojana (PMMY) is launched by the Hon’ble Prime Minister on April 8, 2015. Mudra loan can be availed from a nearby branch of a bank, NBFC, MFIs etc.

Also read: Small business ideas with low investment 

Key Features of MUDRA Loan under Pradhan Mantri MUDRA Yojana (PMMY)

Following are the key features of Mudra loan under Pradhan Mantri MUDRA Yojana (PMMY)
1. Pradhan Mantri MUDRA Yojana (PMMY) scheme offers three types of loans based on the need and growth of the micro-enterprise.
2. There is no minimum loan amount.
3. The maximum loan amount that can be availed is Rs. 10 lakhs.
4. No collateral security required for availing Mudra loan.
5. The interest rates are as per the RBI guidelines issued in this regard from time to time.
6. There is no subsidy for Mudra loan. If the loan proposal is linked to a Government scheme where subsidy is given, then it will be eligible under PMMY too.
7. There are no processing fees for Mudra loan.

Categorization of MUDRA Loan under Pradhan Mantri Mudra Yojana (PMMY)

Under the aegis of Pradhan Mantri Mudra Yojana (PMMY), MUDRA has created three schemes. Mudra loan schemes are categorized as per the stage of growth and funding needs of the beneficiary micro unit. The loan schemes are: 
1. Shishu: Loans upto 50,000/-
2. Kishor: Loans above 50,000/- and upto 5 lakh
3. Tarun: Loans above 5 lakh and upto 10 lakh
More focus is given to Shishu category units and then Kishor and Tarun categories so that more funds go to Shishu category units.

Eligibility for MUDRA Loan under Pradhan Mantri Mudra Yojana (PMMY)

Eligibility criteria for availing MUDRA Loan under Pradhan Mantri Mudra Yojana (PMMY) is given below
1. Any individual including women, proprietary concern, partnership firm, private limited company or any other entity with a business plan for a non farm income generating activity.
2. Non-farm enterprises under “Micro Enterprises” and “Small Enterprises” segment.
3. Non-farm businesses such as manufacturing, processing, trading or service sector.
4. Whose credit need is upto 10 lakh.
5. The usual terms and conditions of the lending agency may have to be followed.

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Purpose of MUDRA Loan under Pradhan Mantri Mudra Yojana (PMMY)

Mudra loan under Pradhan Mantri Mudra Yojana (PMMY) is given for various purposes which provide income generation and employment creation. For example
1. Business loan for traders, vendors, shopkeepers and other service activities.
2. Loan for working capital through MUDRA cards.
3. Financing for equipment for micro units.
4. Loan for transport vehicle.

Activities covered under Pradhan Mantri MUDRA Yojana (PMMY)

An illustrative list of activities covered under Pradhan Mantri Mudra Yojana (PMMY) scheme is given below
1. Transport Vehicle
Purchase of auto rickshaw, small goods transport vehicle, three-wheelers, e-rickshaw, passenger cars, taxis, etc.
2. Community, Social & Personal Service Activities
Gymnasium, tailoring shops, Beauty parlors, photocopying shops, medicine shops, courier service, etc.
3. Food Products Sector
Papad, achaar, jam, biscuit, bread, ice cream making units, sweet shops, canteen services, cold chain vehicles, agricultural produce preservation at rural level etc.
4. Textile Products Sector / Activity
Apparel design, knitting, computerized embroidery, handloom, khadi activity, chikan, zari & zardozi work, handwork, dyeing and printing, cotton ginning, stitching of bags, vehicle accessories, furnishing accessories, etc.
5. Business loans for Traders and Shopkeepers
Loan for running shops, trading business activities and services.
6. Equipment Finance Scheme for Micro Units
Loan for purchasing machinery and equipment for setting up micro-enterprises.
7. Activities allied to agriculture
Loan for activities such as pisciculture, beekeeping, poultry, rearing, diary, fishery, agriclinics, food processing, etc.

How to apply for MUDRA Loan under Pradhan Mantri Mudra Yojana (PMMY)?

Mudra loan under Pradhan Mantri Mudra Yojana (PMMY) can be availed of from a local bank in your area, NBFC, MFIs etc. You can also file an online application for Mudra loan on Mudramitra portal ( The details regarding the documents required may be taken from any of the lending institutions in your locality. Ideally, following documents are required:
1. Mudra loan application form
2. Address proof
3. Identity proof
4. Tow recent passport size photos
5. Quotation of machinery or other assets to be purchased
6. Business plan
7. Proof of SC/ST/OBC or minority if applicable
8. Name of the supplier of machinery


Mudra card is an innovative product against the Mudra loan account which provides working capital facility in a flexible manner. Mudra card is a debit card for working capital portion of the Mudra loan.
MUDRA Loan | Pradhan Mantri MUDRA Yojana (PMMY)
Mudra card can be used in multiple withdrawals to manage the working capital limit properly. Mudra card can be used to withdraw cash from any ATM and also for payment through “Point of Sale” machines. Banks can customize Mudra card by incorporating their logo and name.

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Also read: How to apply for loan against LIC policy online?

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MUDRA Loan | Pradhan Mantri MUDRA Yojana (PMMY)

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