The Government of India launched a flagship scheme called Prime Minister Mudra Yojana (PMMY) on 8th April 2015 to extend affordable loans to the non-corporate, non-farm micro and small enterprises to cater to their funding needs. One of the major aims of MUDRA loans was to bring the target audience into the formal financial fold.
Micro Units Development & Refinance Agency Ltd. (MUDRA) is a new institution set up by Government of India to provide funding to the non-corporate, non-farm sector income generating activities of micro and small enterprises whose credit needs are below ₹10 Lakh.
Under the aegis of Pradhan Mantri MUDRA Yojana (PMMY), MUDRA has created three products i.e. ‘Shishu’, ‘Kishore’ and ‘Tarun’ as per the stage of growth and funding needs of the beneficiary micro unit. These schemes cover loan amounts as below:
- Shishu: covering loans up to ₹50,000
- Kishore: covering loans above ₹50,000 and up to ₹5,00,000
- Tarun: covering loans above ₹5,00,000 and up to ₹10,00,000
All Non-Corporate Small Business Segment (NCSBS) comprising of proprietorship or partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, food processors and others in rural and urban areas, are eligible for assistance under Mudra.
Bank branches would facilitate loans under Mudra scheme as per customer requirements. Loans under this scheme are collateral free loans.
Eligibility for MUDRA Loan Application:
Enterprises and entities falling under the following categories comprise MUDRA loan eligibility.
- All non-corporate non-farm enterprises.
- Primarily engaged in income generation through manufacturing, trading and services.
- Where the requirement of credit is for maximum Rs.10 lakhs or lower.
- Engaged in allied agriculture services since 1st April 2016.
How to apply for MUDRA loan at a financial institution?
Individuals have to follow the steps mentioned below to apply for MUDRA loan:
- Step 1.Keep the necessary documents ready
Applicants need to have the necessary documents required to avail a MUDRA loan. These include identity proof (Aadhaar, Voter ID, PAN, Driving License, etc.), address proof (electricity bill, telephone bill, gas bill, water bill, etc.), proof of business (business registration certificate, etc.).
- Step 2.Approach a financial institution
Individuals can apply for a MUDRA loan with almost all leading financial institutions in India.
- Step 3.Fill in the loan application form
Applicants then have to fill the MUDRA loan application form and furnish their personal and business details. They also have to ascertain the amount they want to avail before knowing how to apply for MUDRA loan scheme.
Under the PMMY scheme, one can apply for 3 types of MUDRA loans:
- Sishu – Covers loans up to Rs.50,000 for starting a business or for businesses in its early stages.
- Kishor – Covers loans up to Rs.5 Lakh for already established businesses seeking additional funding.
- Tarun – Covers loans up to Rs. 10 Lakh for well-established businesses meeting certain eligibility.