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.
What is MUDRA?
Micro Units Development and Refinance Agency Limited is MUDRA full form created as a refinancing institution providing loans up to Rs. 10 lakhs maximum to the eligible enterprises through the Commercial Banks, RRBS, Cooperative Banks, NBFC and MFI etc. The borrowers can approach the nearby branches of the lending institutions or apply for loans under the MUDRA scheme or apply online.
The genesis of MUDRA:
The largest economic sector of the country after agriculture comprises of non-corporate micro enterprises generating the bulk of the employment opportunities estimated to be approximately ten crores impacting the life of 50 crore Indians. They are mainly engaged in manufacturing, trading, processing and services, and the enterprises are broadly classified as proprietary or Own Account Enterprises (OAE). Understandably, this sector is deemed to be the economic bulwark of the country, yet it is reckoned to be the largest disorganized business eco-systems in the world. The NSSO survey of 2013 places the OAE at 5.77 crore units, which lie out of the ambit of the formal financial sector enjoying no credit facilities whatsoever. The MUDRA scheme under the aegis of the PMMY aims to be this huge sector into the fold of institutional credit, transforming them into a potent instrument of employment and GDP growth.
The mission statement of Pradhan Mantri Mudra Loan is to create an inclusive value based entrepreneurial culture which is sustainable in partnership with financial institutions in achieving financial security and success.
key benefits of MUDRA loan:
- Micro and small enterprises engaged in income generation are the prime target for extension of loan facilities.
- The borrowers are not required to provide any collateral or security to avail of Mudra Loan.
- There are no processing charges for availing of the loan.
- The loans are provided for the funded and non-funded category, inducing an element of flexibility in the usage of funds.
- The loans can be in the form of term loans, overdraft facility, letters of credit or bank guarantees, thus catering to a wide array of requirements.
- The Mudra loan scheme does not prescribe any minimum amount.
MUDRA Loan Details:
The name of the type of loan facilities under the Pradhan Mantri Mudra Loan is suggestive of the developmental phases of an enterprise and the quantum of loan sanctioned. There are three Categories of the MUDRA loans based on the stated parameters making the business viable.
1. Sishu: This loan is meant for entrepreneurs who are looking to start a business or in the process of establishing one. The maximum loan sanctioned under this category is Rs.50000. The basic norms of the loan are:
- To provide finance for machinery.
- Valid quotation and supplier details are essential.
2. Kishor: Under the MUDRA scheme, this category of loan is targeted towards entrepreneurs looking to expand their business through the infusion of fresh funds. Thus, the loan sanctioned under this category is in the range of Rs.50001 to Rs.5 lakhs. The key requirements for availing of this loan are:
- The existing balance sheet for the previous two years.
- Bank account statement.
- Income and sales returns.
- Estimated balance sheet for the current year.
3.Tarun: The third type of loan under PMMY is for entrepreneurs who are well entrenched and have established themselves in the business and yet looking for further growth or diversification. The loan sanctioned under Pradhan Mantri Mudra Yojana for this type of loan is in the range of Rs.500001 to Rs.10 lakhs. The amount involved being the highest under the MUDRA Scheme, the requirements are more stringent than the other two loans. Some of the key requirements are:
- All the requirements listed for Kishor Mudra Loan.
- Address and Identity proof.
- Caste certificate, if eligible for reservation.
- Primarily the loan facilities are extended to non-corporate non-farm enterprises. However, farm sector enterprises involved in allied services like fisheries, food processing and horticulture, to name a few are eligible.
So, if you are thinking to start your own business, you can take benefits of this scheme and contact with your nearby bank branches, check the eligibility of banks and processes and take loan according to your business.