Mudra Loan – All You Need to Know

‘Micro-Units Development and Refinance Agency’ is commonly termed as MUDRA. The Mudra loan scheme is offered under the Pradhan Mantri Mudra Yojana (PMMY). It was launched way back on April 8, 2015, to support the non-corporate, non-farm small/micro-enterprises.

What aims and visions do the Mudra Loan scheme look up to?

Mudra Loan scheme aims to promote the entrepreneurial culture. It has the mission to create an inclusive, sustainable environment with our partner banking institutions such as Commercial Banks, RRBs, Small Finance Banks, MFIs, and NBFCs to promote the emerging and desiring business class and help them achieve their goal of economic success and financial security.

Mudra Loan

Under which type of loan can the Mudra Loan be classified?

Mudra Loan is considered to be a type of term loan. It is designed for a group or an individual in the business domain to facilitate them with availing an amount of loan for business expansion, purchasing inventory, etc. You can help up to Rupees 50,000 and a maximum of 10 lakhs under the mudra loan based on the Sishu, Kishor, and Tarun categories.

The Sishu scheme sanctions a loan of 50,000 or below.

The Kishor scheme allows you to apply for a loan starting from 50,000 to 5,00,000.

Under the Tarun scheme, you can take a loan within five lakhs to 10 lakhs for your desired purpose.

What criteria must you fulfill to be eligible for applying for the Mudra Loan?

The Mudra Loan applicant must be:

• An individual of At least 18 years old
• A trader, A manufacturer, or A business owner
• A startup businessman or A small-scale industrialist
• A shopkeeper or An individual with agricultural engagements
• You use tractors, tillers as well as two-wheelers for commercial activities.
• People involved in poultry farming, bee-keeping, pisciculture, etc. – the ‘Agri-allied non-farm income-generating activity.

What is the List of Activities that the Mudra Loan scheme covers?

• The sector of Food products.
• The transport of both goods and passengers through transport vehicles.
• Activities involving Community, society, and personal service as well
• The shopkeepers and traders can avail of business loans.
• Sector concerning Textile products and activities
• Activities revolving around Agriculture
• Micro Units are supporting Equipment finance schemes.

What are the steps that can help you to Apply for the Mudra loan?

• Firstly, Approach a lender who has enrolled themself under the MUDRA scheme.
• Under the suitable loan category, Duly fill up the application form
• Keep the following documents handy

ID proof
Address evidence (Utility bills (electricity bill, telephone bill, and so on), Aadhaar card, Voter’s ID card, passport).
Business proof(Quotation of the commodity or items which are to be bought and used for the business).
Two passport-size photographs.
caste certificate subjected to availability.
• Attach the necessary documents to your application.
• Wait till your application gets accepted.

What are the benefits you can avail of under the Mudra Loan scheme?

• People can level both Banking and financial services in rural and urban areas.
• Micro-small businesses and startups can enjoy financial banking.
• Small amounts of loans at affordable interest rates can amplify the business people, including the Food vendors, shopkeepers, and other small businesses.
• Government comes to the Rescue of the borrower who cannot repay the amount borrowed. The government will bear The responsibility for the loss that occurred.
• In areas where people have no access to basic banking facilities, this scheme will make financial aid available.
• The repayment period of the scheme, which stands at 3-5 presently, can be extended up to seven years.
• The scheme facilitates the Women borrowers to avail the loan at a much-discounted interest rate.
• The designated leaders can also avail themselves of the Refinance schemes.
• The Micro Credit Scheme also facilitates Individuals to generate income through micro-enterprise activities. It fosters modern innovations and improves skill development, thus fulfilling the motto of the “Make In India” campaign.
• It encourages investment by building the best manufacturing infrastructure in the country.
• The government does not demand collateral or security from you to avail of this scheme.

What is the processing fee charged for Mudra Loan?

The processing fee is nil for Sishu and Kishore schemes. However, you are charged 0.5% under the Tarun scheme. The Sishu category helps entrepreneurs belonging to the nascent stage in business or are seeking to start one. On the other hand, the Kishore scheme helps business individuals expand their operations. The Tarun scheme processes you through Eligibility criteria to sanction you a wholesome amount of 10 lakhs.

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