Pradhan Mantri Mudra Yojana
The Pradhan Mantri Mudra Yojana commonly known as the Mudra Loan was launched by the Government of India in 2015. This funding is specifically designed for MSMEs and small business enterprises. MSME sectors’ potential to improve the GDP of the nation has pushed the government to come up with this unique business loan project. No security or collateral is required to acquire a Mudra Loan.
Various Private banks, Public banks, NBFCs, Micro Finance Institutions and regional rural banks offer these schemes. There are various sub-schemes provided by the government under the Pradhan Mantri Mudra Yojana.
Types of Mudra loan
- Interest Rates: between 1%-12%
- Loan Amount: Upto Rs 50,000
Who should opt for Sishu loan
The Shishu loan is best suitable for those who have just started a new business. It can also serve the needs of businesses which are at their rudimentary stages.
- Interest Rates: between 8%-12%
- Loan Amount: between Rs. 50,001 – Rs. 5,00,000
Who should opt for Kishor loan
The Kishor Loan caters to those business owners who have already started a business but needs financing to survive in the market. This loan is also appropriate for those who want to start a business and require a larger amount of funds than the Shishu loan.
- Interest Rates: between 11%- 20%
- Loan Amount: Rs. 5,00,001- Rs. 10,00,000
Who should opt for Tarun loan
The Tarun loan offers the highest amount among the three schemes. This scheme helps those entrepreneurs who want to bring about significant changes in their businesses, including the expansion of the business.
Mudra Loan Eligibility
The Mudra Loan can only be obtained to fulfil business requirements; it cannot be utilised for any personal needs. The Mudra Loan is available for business entities such as non-firm small enterprises, non-corporate small businesses, small manufacturing units, shopkeepers, vegetables and fruits sellers and the likes.
However, the individuals need to meet certain eligibility criteria to procure a Mudra Loan. This includes the following.
- The individual applying for the loan must be an Indian citizen.
- Borrowers must have a good history of loan repayment.
- The loan amount cannot exceed Rs. 10,00,000.
- Businesses that are already earnings from farming are not eligible for a Mudra Loan.
- The schemes are available to small businesses in both urban and rural areas.
Procedure to apply for the Mudra loan
You need to have a thorough plan for your business in order to apply for a business loan. You can select any private or public sector banks that cover the Mudra Loan schemes. The borrower is required to fill up the application form. Here, you need to provide business as well as personal details. After doing so, your loan will be approved swiftly, if you have a current account. In case if you are a new entrepreneur, you should have an open account with the bank to process the loan.
Offerings under PM Mudra yojana
The Pradhan Mantri Mudra Yojana comes with various schemes. The wide range of schemes has proved to be very advantageous for different MSME sectors. The most pertinent schemes are given below.
Micro Credit Scheme
The micro credit scheme is offered by Micro Financial Institutions. A loan amount of Rs. 1 lakh can be borrowed under this scheme. This loan caters to micro-enterprises, self-help groups and joint liability groups.
Women Enterprise Programme
This scheme is specially designed for women running a business of their own. This scheme was initiated to motivate businesswomen, women’s joint liability groups and self-help groups to establish their own micro business. The government ensures a special reduction of 0.25% against such loans.
Refinance scheme for banks
Mudra enables refinance facilities to extend the activities of micro-enterprises. This scheme is available in various banks including Commercial Banks, Co-operative banks and Regional Rural Banks.
Mudra card is given to the loan applicants after payment of the loan amount. This is a kind of credit card. It enables the borrowers to buy raw materials or to avail of new machines. This can also be used for arranging money for the working capital in which the money and credit is provided to the entrepreneurs. Only 20% of the loan amount that is a maximum of Rs. 10,000 can be utilised using the Mudra card.
Credit Guarantee Fund
The credit guarantee fund, otherwise known as the portfolio credit guarantee, is operated by the Credit Guarantee Trustee Company Limited. It is the creation and utilisation of the Credit Guarantee Funds for the Micro Units. Eligible businesses can easily avail microloans under this scheme.
Equipment Finance Scheme
This loan allows small and micro businesses to buy machinery and other raw materials. This motivates small enterprises to upgrade their techniques of production and achieve better efficiency.
With thousands of small and micro businesses opening up every day, the Mudra Schemes can help entrepreneurs, old and new, to finance their enterprises without any complications. These schemes can help them grow and contribute to the country’s GDP and help improve the economic condition.