Prime Minister Mudra Yojna (PMMY) is the scheme for financing non-farm sector entrepreneurs. Mudra Loan upto Rs.10 lac is provided by banks, NBFC and MFIs under this scheme without any collateral security. Loans under PMMY are great help for the startups and entrepreneurs, who want to start their own business but does not have any security to get the loan.
Mudra Loan Eligibility:
- All non-farm enterprises i.e., enterprises in any sector except farming but Mudra Loan is available for allied agricultural activities.
- Mudra Loan is given for an income generating activity.
- Mudra Loan is available for Manufacturing, Service and Trading activities.
- Mudra Loan is available if Loan requirement upto Rs.10 lacs.
- Applicant should not be defaulter of any bank.
- Applicant may be an individual, a proprietorship firm, a partnership firm, a private limited company or a public limited company.
Types of PMMY loans:
- Fund Based Working Capital Limit – Cash Credit Limit for day to day working capital requirement. There is no repayment schedule and only interest is to be served on monthly basis on the amount withdrawn. However, the limit should be renewed annually by submitting requisite documents.
- Non Fund based limit such as Letter of Credit, Letter of Guarantee
- Term Loan for purchase of machinery, furniture or other fixed assets. The term loan is repaid in instalments upto 5 years.
- Overdraft (upto Rs.50,000).
Categories of Loans under Mudra:
- Shishu Loan – Loan upto Rs.50,000
- Kishore Loan – Loan upto Rs.5 lacs
- Tarun Loan – Loan upto Rs.10 lacs
Rate of Interest on Mudra Loan:
- For Micro Enterprises loan upto Rs.50,000 (under Shishu Category) is available at MCLR.
- For other categories the rate of interest range from MCLR to MCLR + 3%.
- No Processing fees is levied on Mudra Loans upto 5 lacs. Above Rs.5 lacs, processing fees varies from Bank to Bank.
How to apply for Mudra Loan?
You can approach any of your nearest branch of any bank with Mudra Application Form and required documents to avail Mudra Loan.
Mudra Loan Application Form:
You can download the application form for Mudra Loans
Documents required for Mudra Loan:
Following is the checklist for Mudra Loan under Shishu Category:
- Identity Proof – Self attested copy of any one – Voter Id Card, PAN Card, Driving License, Aadhar Card, Passport, Photo Id card issued by Govt. Authority
- Address Proof – Self attested copy of any one – Aadhar Card, Voter Id Card, Recent Telephone Bill, Electricity Bill, Bank Passbook, Certificate issued by Govt. Authority
- 2 Recent passport size photographs
- Proof of Business, if any
- Quotation of Machine/ item to be purchased
- Proof of SC/ ST/ Minority, if applicable
Following is the checklist for Mudra Loan under Kishore & Tarun Category:
Apart from the above documents (as applicable for shishu category), following documents are required for Kishore and Tarun Category Loans
- Statement of account for last six months (existing bank account)
- If Loan above Rs.2 lacs – Last two years balance sheet and Income Tax Returns and GST Returns, if applicable.
- Projected Balance Sheet & Profit & Loss Account – For One year if loan for working capital and for upto the year of final repayment in case of Term Loan.
- Sales upto current date during current financial year
- Project Report (if the Term Loan)
- Memorandum & Articles of Association (if company) and Partnership Deed (if partnership firm).
- Asset & Liability Statement of all Directors/ Partners/ Proprietor
Security for Mudra Loans:
- Mudra Loans are to be secured by the asset which is purchased/ created out of the funds provided by the bank.
- No collateral security is required for availing Mudra Loan
- No third party guarantee is required for Mudra Loan. (Guarantee of Proprietor/ Partners/ Directors is not treated as third party guarantee).
Margin on Loans under Mudra Scheme
- No margin upto Rs.50,000
- Above Rs.50,000, margins varies from Bank to Bank but generally in the range of 25%.
PMMY Loan under Shishu category (upto Rs.50,000) are disbursed through Mudra Card. An OD account is opened and Mudra Card (a type of ATM Card) is provided to borrower to get cash as per the requirement of his business. Mudra Card can also be used at PoS machine for payment.
Major Banks from where you can avail Loan under PMMY:
- State Bank of India
- Bank of Baroda
- Bank of India
- ICICI Bank
- HDFC Bank
- Axis Bank
- Canara Bank
- Corporation Bank
- Central Bank of India
- Oriental Bank of Commerce
- Uco Bank
- Indian Bank
- Syndicate Bank
Mudra Loan for Purchase of Vehicle
Mudra Loan can be availed for purchase of commercial vehicle such as taxi (cab), truck or other type of commercial vehicle for generating income. But mudra loan is not available for purchase of personal car.
Mudra Loan for Purchase of Shop
Mudra loan can be availed for purchase of shop, if the borrower intends to start his business from that shop. However, bank will not extend mudra loan purchase of shop if it is intended for renting.
Mudra Loan for Education
Mudra Loan is given only to new or existing enterprises for income generating activities and can not be granted for financing Education
Mudra Loan for Marriage or personal use
Mudra Loan is not available for personal finance like marriage, purchase of household items, travel or any other personal purpose.
Mudra Loan for Purchase of House
No, Mudra Loan can not be availed for purchase of house.