Key Highlights of Mudra Loan

Interest Rates for Mudra Loans

The interest rates on PMMY loans are not determined by MUDRA. Lending institutions now have autonomy from the agency when it comes to determining the interest rates for MUDRA loans. Therefore, potential borrowers who intend to take up a MUDRA loan should get the interest rates for such loans from the relevant bank, NBFC, or MFI.

Lenders and Interest Rates

Features of PM Mudra Yojana

Loan Amount

Credit Guarantee Fund for Micro Units (CGFMU)

The Credit Guarantee Fund for Micro Units (CGFMU), run by National Credit Guarantee Trustee Company Limited (NCGTC), provides collateral-free loans.

Tenure of Repayment

MUDRA has not indicated how long the debts that are refinanced using the PMMY program must be repaid. The agency has allowed lending institutions that offer MUDRA loans to freely determine the terms of their loans in accordance with both their own policies and the guidelines established by the RBI.

Mudra Loan Facility Types

The PMMY program offers the following loan types:

• Term Loans
• Overdrafts
• Cash Credits (CC)

Fees and Charges

Lending institutions offering MUDRA loans may decide to charge an upfront fee in accordance with their corporate policies. However, for loans falling within the Shishu category, the majority of lenders do not levy an upfront fee or processing fees.

How to Register for PM MUDRA Yojana

To obtain a loan under PMMY, potential borrowers for business loans should approach specific:

• Public and Private Sector Commercial Banks
• Cooperative Banks
• Regional Rural Banks (RRBs)
• Micro Finance Institutions
• Foreign Banks
• Non-Banking Finance Companies

People can also apply online for MUDRA loans using the UdyamMitra portal.

Qualifications for PM MUDRA Loans

Microbusinesses in the manufacturing, service, processing, or trading sectors—including those connected to agriculture—are eligible for MUDRA loans. The potential borrower must have a good credit history and not be in arrears with any bank or other financial institution.

The evaluation of an applicant's educational background, if any, is contingent upon the specifics of the proposed activity and its prerequisites. In addition, it can be necessary for applicants to possess the expertise, abilities, or information needed to complete the suggested task.

PMMY-eligible Borrowers Include:

• Individuals
• Partnership Firms
• Proprietary Concerns
• Private Limited Companies
• Public Companies
• Any further legal documents

Activities Eligible for MUDRA Loan Coverage

Transport Automobile

Acquisition of transportation vehicles, such as autorickshaws, taxis, e-rickshaws, three-wheelers, and small goods transport vehicles, for the movement of passengers and commodities. This includes:

• Two-wheelers
• Power tillers
• Tractor trolleys
• Tractors used only for business

Activities for Personal, Social, and Community Service

Includes various services such as:

• Salons
• Fitness centers
• boutiques
• DTP and photocopying services
• Dry cleaners
• Tailors
• Pharmacies
• Beauty salons
• Bike and motorbike repair shops
• Courier services

Food Products Sector

Eligible activities include:

• Achar making
• Cold storages
• Small service food stalls
• Daily catering / canteen services
• Cold chain vehicles
• Ice making units
• Sweet shops
• Production of papads, biscuits, bread, buns, jams, jellies, and ice cream

Textile Products Industry/Profession

Includes activities like:

• Clothing design
• Knitting
• Cotton ginning
• Stitching
• Chikan work
• Computerized embroidery
• Traditional dyeing and printing
• Zari and zardozi work
• Powerloom activities
• Khadi activity
• Non-garment textile products like bags, furniture accessories, and car accessories

Loans for Businesses to Traders and Retailers

Individuals are given loans to operate their stores, including:

• Trade-related enterprises
• Commerce-related businesses
• Service-related enterprises
• Non-farm revenue-generating ventures

Micro Unit Financing Program for Equipment

This program supports individuals establishing microbusinesses by investing in necessary machinery or equipment.

Agriculture-related Activities

Includes services that generate income or support livelihoods, such as:

• Pisciculture
• Poultry
• Livestock-rearing
• Beekeeping
• Aggregation of agro industries
• Food & agro-processing
• Dairy and fisheries
• Grading and sorting
• Agri-clinics and agribusiness centers

Note: Crop loans and land rehabilitation projects like irrigation, canals, and wells are not considered part of the agriculturally related activities.

MUDRA Card

The MUDRA Card is a RuPay debit card that provides an overdraft option as a working capital loan. Key features include:

• Multiple withdrawals and credits are permitted
• Digitizes transactions
• Builds the borrower's credit history
• Issued in relation to the MUDRA loan account
• Can be used for purchases at any Point of Sale (POS) machine or to withdraw cash from ATMs or micro ATMs nationwide

Required Documentation to Apply for PM MUDRA Loans

Documentation Needed to Apply for a Loan in the Shishu Category

• Identity Proof: A self-attested copy of one of the following:
  • Driver's license
  • Passport
  • PAN card
  • Voter ID card
  • Aadhaar card
  • Other official government photo ID
• Proof of Residence: The following documents can be used:
  • Most recent phone bill
  • Property tax receipt (no more than two months old)
  • Voter ID card
  • Electricity bill
  • Aadhaar card
  • Domicile certificate
  • Owner's or partners' passbook
  • Most recent bank account statement certified by bank officials
  • Passport
  • Certificate from a local panchayat, government agency, or municipality
• Photographs: Two copies of the applicant's most recent photo (no more than six months old).
• Estimate for Machinery or Goods: Details regarding the cost and specifications of the equipment and/or goods to be purchased.
• Proof of Business Identity and Address: Copies of necessary licenses, registration certificates, or documentation attesting to the business's ownership, address, and identity, if any.
• Verification of Status: Such as SC, OBC, minority, etc.

Documentation Needed to Apply for a Loan under Kishore and Tarun Classification

• Identity Proof: A self-certified copy of one of the following:
  • Driver's license
  • Passport
  • Voter ID card
  • PAN card
  • Aadhaar card
• Proof of Residence: Owner's/partners'/directors' passport, most recent phone bill, property tax receipt (not older than two months), voter ID card, electricity bill, and Aadhaar card.
• Business Documentation: Copies of registration certificates, pertinent licenses, and other papers proving the identity, ownership, and address of the business unit, along with proof of ST/SC/OBC/Minority identification.
• Bank Statement: Current banker account statement for the previous six months, if applicable.
• Financial Documents:
  • Balance sheet for the last two years along with income tax or sales tax return (applicable for all cases from Rs. 2 lakhs and above).
  • Projected balance sheets for one year for working capital limits and for the loan duration in case of term loans (applicable for all cases from Rs. 2 lakhs and above).
  • Sales achieved during the current FY up to the date of application submission.
• Project Report: For the proposed project detailing economic and technical viability.
• Partnership Documents: Articles and Memorandum of Association of the Partnership Deed of Partners/company, etc.
• Asset and Liability Statement: In the absence of a third-party guarantee, an asset and liability statement from the applicant, including directors and partners, may be required to assess net worth.
• Photocopies: Two photocopies of Partners/Proprietor/Directors.