Mudra Loan or the Pradhan Mantri Yojana (PMMY) is a flagship scheme of the Government of India to extend affordable credit to micro and small and medium enterprises. The loan is provided to non-farming and non-corporate micro and small enterprises.
One of the major reasons for the government to take this initiative is to reduce the troubles of debt financing people in the SME and MSME market faced. Due to the unorganized lending sector, many individuals faced difficulty in raising money and thereby being a hindrance to the growth of their business. That is when the government introduced the Micro Units Development and Refinance Agency or MUDRA to help and sustain the small businesses of our nation.
Mudra – A Game Changer is a lending credit line set up as a subsidiary of the Small Industries Development Bank of India (SIDBI).Whenever informal sector people like rickshaw pullers, household factories, etc., looked for formal credit the condition of security was a major hurdle in getting the loan and half of them couldn’t be fulfilled as the borrowers did not own any property or have collateral. With the introduction of Mudra, there is no condition of collateral of up to loan of Rs 10 Lakh and it aims to fund the unfunded.
The primary product of MUDRA will be refinancing for lending to micro businesses/units under the aegis of the Pradhan Mantri MUDRA Yojana.
MUDRA Bank has been established by the government with a Refinance corpus of Rs.20, 000 crore, and credit guarantee corpus of Rs.3000 crore.
The products would be covered under three categories that are as follows:
1) Shishu: covering loans up to Rs. 50,000/-
2) Kishor: covering loans above Rs. 50,000/- and up to Rs. 5 Lakh
3) Tarun: covering loans above Rs. 5 Lakh and up to Rs. 10 Lakh
At least 60% of loans shall be disbursed under the Shishu category and remaining for Kishor and Tarun categories.
Mudra loan under Pradhan Mantri MUDRA Yojana (PMMY) is available at all bank branches across the country. Mudra loan is also issued by NBFCs / MFIs who are engaged in financing for micro enterprises in small business activities.
Mentioned below are the numbers of partner institutions that are a part of the MUDRA scheme and have the right to sanction loans to the borrowers. The government is aiming to add more institutions to the list so as to increase the reach of the MUDRA loans and that the benefit can be absorbed by all individuals across India.
|Sr No.||Partner Institution||Number|
|1||Public Sector Banks||27|
|2||Private Sector Banks||18|
|3||Regional Rural Banks||31|
|5||MFI – NBFC||47|
Any form of business partnership whether sole proprietary or Limited Liability Partnership can avail a loan under MUDRA.
The following are the criteria’s one should fulfill to avail a loan under the MUDRA scheme
Once these criteria’s have been met, a few documents are required for the application process of the loan. These documents are just like any other loan application documents that are required by any lending house. To know in depth of the documents and eligibility criteria of the MUDRA loan follow this link.
The interest rates charged on the loans are decided as per the policy of the bank, keeping in mind the ultimate benefit for the borrower and not the lender. Hence usually the interest rates are reasonable. Scheduled Commercial Banks, RRBs, and Cooperative Banks wishing to avail of refinancing from MUDRA will have to peg their interest rates, as advised by MUDRA Ltd., from time to time.
Once the beneficiary identifies an idea and comes up with a business plan, he is supposed to select the business category under which he wishes to avail the loan (Shishu, Kishor or Tarun). The beneficiary can contact the nearest Public/ Private sector bank where he/ she can apply for a business loan under PMMY. As on date, the following are partners in the MUDRA initiative.
*A detailed explanation regarding the entire process of the application of a MUDRA loan is mentioned in this article. Click on this link to follow the entire process*
A MUDRA loan, however, cannot be obtained for needs of personal financing such as a home loan, car loan/ bike loan. MUDRA loans are specifically catered to only business plans and no other requirements. Some of the instances under which one can avail a MUDRA loan are as follows
Applicants will receive the loan amount for a time period of five years. While this time, the applicant will pay the bank in installments. The applicant will not find it difficult to pay the installments since the interest rates are quite low. Thus, a MUDRA loan enables them to grow and develop their business without adding much stress and hassle to their daily routine and finances.
A detailed blog will be followed to explain the interest rates charged in the MUDRA loans and the repayment process.
To know more about the MUDRA Loan directly from the source, click on this link – MUDRA LOAN.