Many individuals in our country aspire to start a business but need more motivation or collateral when seeking a bank loan. However, there is good news for those in this situation.
The ‘Pradhan Mantri Mudra Yojana’ (PMMY) initiated by the Central Government is designed to address this issue. Under this scheme, individuals can secure a loan of up to Rs. 20 lakh from banks without the need for collateral.
The PMMY aims to promote the growth of micro and small-scale businesses and industries by providing unsecured loans, known as ‘Mudra Loans.’
MUDRA stands for “Micro Units Development and Refinance Agency” and was launched in April 2015 to facilitate funding for micro and small-scale industries and businesses through banks and financial institutions.
Key Features of the Scheme:
- Mudra loans are available for businesses and industries in villages and towns.
- Existing and new businesses can apply for the loan, including those seeking to expand their operations.
- No collateral or guarantee is required to obtain a Mudra loan.
- Upon approval, the loan amount can be accessed through a ‘Mudra Card.’
- The lending bank or financial institution determines the interest rate for Mudra loans.
Eligible Business Activities: The scheme caters to many self-employed activities, including beekeeping, poultry farms, fish farming, fruit and vegetable trading, tiffin centers, dining hotels, transportation services, repair shops, artisan industries, tailoring shops, beauty parlors, and more.
Types of Mudra Loans: Mudra loans are categorized as Shishu, Kishor, and Tarun based on the scale of the business/industry. Loan amounts range from Rs. 50,000 in the Shishu category to Rs. 5,00,000—Rs. 20,00,000 in the Tarun category.
Interest Rates: Interest rates for Mudra loans vary depending on the category, starting from 1-12% for Shishu loans, 8.6% for Kishor loans, and 11.15-20% for Tarun loans.
Eligibility: To be eligible for a Mudra loan, individuals must be Indian citizens aged 18 or above, have the potential to generate employment in non-agricultural sectors, possess a good credit score, and demonstrate experience and expertise in their chosen business or industry.
Required Documents: Applicants must provide the following documents with the loan application.
- Identity proof (Aadhaar, PAN, Driving License, etc.)
- Address proof (Utility bills, Bank statements, etc.)
- Business proof (Business registration, License, etc.)
- Income proof (ITR, Balance Sheet, etc.)
- Passport-size photographs
- Quotation with business details
- Business card
- Registration certificates
How to Apply: Individuals can apply for a Mudra loan through the lending bank or financial institution, either in person or online, via the Udyamimitra website: www.udyamimitra.in.
Mudra Loan Online Application Process:
- Visit the Udyamimitra website: https://www.udyamimitra.in/.
- Click on “Apply Now” and select the type of Mudra Loan (Shishu, Kishor, or Tarun).
- Fill out the online application form.
- Upload required documents.
- After that, submit the filled-in application form.
- The bank will verify your application and documents.
- If approved, the loan amount will be disbursed.
Offline Application:
- Visit a nearby bank branch or financial institution that offers Mudra Loans.
- Meet with a bank representative and express your interest in applying for a Mudra Loan.
- Provide the required documents (listed below).
- Fill out the loan application form.
- Submit the application form along with the documents.
- The bank will verify your application and documents.
- If approved, the loan amount will be disbursed.