Mudra Loan – Eligibility, Interest Rates, Documents, Security, Application Process

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Mudra Loan – Eligibility, Interest Rates, Sishu, Kishore, Tarun, Types of Mudra Loan – application process, required documents. Mudra stands for Micro Units Development & Refinance Agency which is a new institution setup by Government of India to finance non corporate, non farm small / micro enterprises unit. Mudra Bank Loans are classified under Pradhan Mantri Mudra Yojana (PMMY) scheme which was announced  by Government of India while presenting 2016 budget.

The Pradhan Mantri Mudra Yojana (PMMY) scheme was announced with an objective to encourage small businesses and entrepreneurs who need micro finance to expand their operations and capabilities. Under Mudra Bank Loan schemes, a micro credit up to ₹ 10 lakh is provided under three categories of product – SHISHU, KISHOR and TARUN depending upon the stage of growth and funding needs of beneficiary micro units.

mudra loan eligibility interest rates security documents
mudra loan eligibility interest rates security documents

Categories of Mudra Loan – Amount of Loan

There are three categories of Products by MUDRA to provide finance to micro units according to their stages of growth and funding needs.

Shishu kishore tarun types of mudra loan
Shishu kishore tarun types of mudra loan

SHISHU (for start ups)

A Loan maximum up to ₹ 50,000/- is provided for this category of Micro Units. This category is for businesses units which are just starting up and need funding.

KISHOR

A loan in range from ₹ 50,000/- to ₹ 5 Lakh is provided for this category of micro unit. This category is for those business units which have already been started but need additional funding for estabilishment.

TARUN

A loan in range from ₹ 5 Lakh to ₹ 10 Lakh is provided for this category of micro unit. It is the maximum limit which can be availed under Mudra Loan. This category is for those businesses which are already estabilished but need funds for expansion.

Eligibility for Mudra Loan

All those businesses which are engaged in non farm income generating activities and are from the following non corporate small business segment are eligible to apply for mudra loan under Pradhan Mantri Mudra Yojana(PMMY).

  • Proprietary Concern
  • Partnership Firm
  • Private Ltd Company
  • Public Company
  • Shopkeepers
  • Repair Shops
  • Machine Operators
  • Food Processors
  • Vendor of Fruits, Vegetables
  • Truck operators
  • Artisans
  • Other Rural / Urban Industries

Other eligibility conditions include –

  • The applicant must be Indian Citizen.
  • The applicant must have satisfactory credit track record and should not be defaulter to any bank or financial institution.
  • Individual borrowers may be required to possess the necessary skills/experience/ knowledge to undertake the proposed activity.
  • The need for educational qualification, if any, need to be assessed based on the nature of the proposed activity, and its requirement.

Purpose of Mudra Loan

Mudra Loan can be availed for the following purpose :

Vehicle Loan : Commercial Vehicle Loan, Car Loan and Two Wheeler Loan

Business Installment Loan : Working Capital Requirement, Buying Plant and Machinery, Renovation of Offices

Business Loans Group Loans (BLG) and Rural Business Credit (RBC): Drop line overdraft/Overdraft facility/Working capital loans for business groups and rural businesses

Interest rates on Mudra Loan

Interest rates are to be charged as per the policy decision of the bank under RBI guidelines. Scheduled Commercial Banks, RRBs and Cooperative Banks wishing to avail of refinance from MUDRA will have to peg their interest rates, as advised by MUDRA Ltd., from time to time.

Documents Required for Pradhan Mantri Mudra Yojana (PMMY)

Following documents are required to apply for Mudra Bank Loan under Pradhan Mantri Mudra Yojana (PMMY) :

  • Duly filled in Mudra Bank Loan Application Form
  • Business Plan
  • Self Attested Photo ID and Address Proofs
  • 2 Passport size photographs
  • Quotation of Machinery /Items to be purchased
  • Supplier Details / Machinery Details
  • Business Proof (ID/Address like tax registration, business license)

Mudra Loan Stepwise Application Process

A borrower who wish to avail Mudra Bank Loan for above categories of Loan, must go through following process :

  • Prepare documents as per checklist and also business plan for which you wish to avail Mudra Bank Loan.
  • Visit Bank Branch / lending institution (along with relevant required documents) who offer Mudra Bank Loan under Pradhan Mantri Mudra Yojana (PMMY).
  • Bank or financial institution will process the application for Mudra Loan as per their terms and conditions.
  • Mudra Loan will be sanctioned after completion of all formalities.

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