In this article, we generally give our honest reviews about the Pradhan Mantri MUDRA Yojana (PMMY) loan offered by the honorable government of India. Generally, a MUDRA loan is a loan given by the Central Government of India for business purposes. If you are a citizen of India then you can take a MUDRA loan subject to other conditions. Almost every Indian Public Sector as well as Private Sector Bank Gives Mudra Loans.
What is a MUDRA loan and how can you get it?
MUDRA is a non-banking financial institution (NBFC) that supports the growth of the micro-enterprise sector in the country. MUDRA provides refinance assistance to banks, microfinance institutions, and micro-bank financial units (NBFCs) for lending to microenterprises with loan requirements of up to ten lakh rupees. Under the Pradhan Mantri MUDRA Yojana, MUDRA provides refinancing assistance to small and medium-sized enterprises (SMEs).
Who is eligible for a MUDRA loan?
Who can apply for a mudra loan: Anyone who owns or manages a small business organization is eligible to apply for one. Loans under the Mudra Yojana are distributed in three major types. The first category, known as Shishu (for extremely small business units), includes loans up to a maximum of 50,000 rupees (about).
What is the benefit of the MUDRA loan?
The Mudra scheme provides loans for which there is no requirement for collateral. There is no fixed rate of interest on the loans that are made available under this arrangement. Interest is imposed at a rate equal to the base rate plus 1–7% of the loan amount. This can also be significantly more, depending on the level of risk involved and the profile of the client.
Is it necessary to provide a guarantee for a Mudra loan?
For the purpose of applying for a Mudra loan, applicants are not needed to submit any collateral/security or any third-party guarantee. Not only that but there are no processing fees or foreclosure charges.
What exactly is MUDRA?
In India, MUDRA, which stands for Micro Units Development & Refinance Agency Ltd., is a financial agency that was established up by the government to assist in the development and refinancing of micro-unit enterprises.
The announcement was made by the Honourable Finance Minister during the presentation of the Union Budget for Fiscal Year 2016.
The mission of MUDRA is to offer capital to the non-corporate small business sector through a network of Last Mile Financial Institutions such as banks, non-bank financial companies, and microfinance institutions.
WHY HAS MUDRA BEEN ESTABLISHED?
One of the most significant impediments to the growth of entrepreneurship in the Non–Corporate Small Business Sector (NCSBS) is a lack of financial assistance to this sector.
In this sector, more than 90 percent of the workforce does not have access to official sources of financing.
The Government of India is establishing MUDRA Bank by a statutory enactment to cater to the needs of the NCSBS segment, often known as the informal sector, in order to bring them into the mainstream.
WHERE DO MUDRA’S ROLES AND RESPONSIBILITIES FIND THEMSELVES?
In addition, MUDRA would be responsible for refinancing all Last Mile Financiers, including Non-Banking Finance Companies, Micro Finance Institutions, Societies, Trusts, Section 8 Companies [formerly Section 25], Small Finance Banks, and Regional Rural Banks, who are in the business of lending to micro/small business entities engaged in manufacturing, trading, and services activities, and agricultural-related activities.
MUDRA would also collaborate with financial intermediaries at the state and regional levels in order to provide financing to Last Mile Financiers of small and micro business enterprises.
WHAT TYPES OF LOANS ARE AVAILABLE FROM MUDRA?
In accordance with the Pradhan Mantri MUDRA Yojana (PMMY), MUDRA has already developed its first set of products and schemes, which are available for public use.
As a way of identifying the stage of growth/development and finance requirements of the beneficiary micro unit/entrepreneur, three interventions have been named: ‘Shishu,’ ‘Kishor,’ and ‘Tarun,’ which serve as a reference point for the next phase of graduation/growth to be anticipated. The following are the budgetary limits for these schemes:-
• a. Shishu is responsible for loans up to 50,000/-; b. Kishor is responsible for loans beyond 50,000/- and up to 5 lakh, and c. Tarun is responsible for loans between 5 lakh and 10 lakh.
MUDRA’s delivery channel is intended to be through the route of refinancing, which is largely directed at banks, non-bank financial institutions, and microfinance institutions.
At the same time, there is a pressing need to build and grow the distribution channel at the grassroots level of operations.
The term “Last Mile Financiers” refers to a huge number of organizations that provide informal funding to small firms. These organizations can take the form of corporations, trusts, societies, associations, and other networks.
What exactly is the MUDRA Vision?
Our vision is to be the world’s leading integrated financial and support services provider, benchmarked against global best practices and standards, for people at the bottom of the pyramid in order to help them achieve comprehensive economic and social development.
What is the mission of MUDRA?
In conjunction with our partner institutions, we want to build an entrepreneurial culture that is inclusive, sustainable, and based on values, thereby achieving economic success and financial security.
WHO ARE THE TARGET CLIENTS OF MUDRA/WHAT TYPES OF BORROWERS MAY BE ELIGIBLE FOR ASSISTANCE FROM MUDRA?
NCSB stands for Non-Corporate Small Business Segment, and it is comprised of millions of proprietorship/partnership firms operating as small manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors, and other types of businesses in both rural and urban environments.
Is MUDRA’s assistance available to Regional Rural Banks (RRBs)? WHAT IS THE ELIGIBILITY FOR MUDRA’S ASSISTANCE?
Yes, MUDRA will provide refinance assistance to RRBs in order to help them improve their liquidity.
WHEN DOES MUDRA CHARGE INTEREST AND WHAT IS THE RATE OF INTEREST CHARGED?
MUDRA is a refinancing organization that will offer its finances to Last Mile Financiers in order to enable them to reach out to the sector and expand their operations.
MUDRA’s distinctive consumer value proposition will be the ability to obtain financing in connection with reasonable pricing, as previously stated.
For the ultimate borrower, it will employ a number of creative financing methods, including technology, in order to reduce the cost of funding for him or her.
I OWN A SMALL BUSINESS THAT SPECIALIZES IN PAPER PRODUCTS. CAN MUDRA BE OF HELP TO ME?
MUDRA loans are accessible through banks, non-bank financial institutions, and microfinance institutions (MFIs) for such activities. MUDRA loans are available for all types of manufacturing, commerce, and service sector activities.
Loans are divided into three categories: Shishu, Kishor, and Tarun. Specifically, these solutions are intended to serve customers who operate at the lower end of the enterprise spectrum. The loans would be extended available through financial institutions such as microfinance institutions, non-bank financial institutions, and banks.
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I JUST RECENTLY COMPLETED MY COLLEGE EDUCATION. I WANT TO SET UP MY OWN ENTREPRENEURSHIP BUSINESS. CAN MUDRA BE OF HELP TO ME?
MUDRA loans are available in three different types of packages. Loans up to Rs. 50000/-/- are accessible for small businesses under the ‘Shishu’ category, while loans over Rs. 50,000 and up to Rs. 5 lakh are available under the ‘Kishor’ category.
It also provides loans in excess of 5 lakh rupees and up to 10 lakh rupees under the Tarun category. Depending on the nature of your business and the requirements of your project, you may be able to obtain financing from one of the MUDRA intermediaries in accordance with the applicable regulations.
My DIPLOMA in FOOD PROCESSING TECHNOLOGY was awarded to me in 2010. I WANT TO SET UP MY OWN BUSINESS. PLEASE EXPLAIN TO ME HOW TO DO THIS.
Food processing is an activity that is eligible for coverage under one of the MUDRA programmes. Any financing bank, microfinance institution, or non-bank financial corporation (NBFC) can provide help under MUDRA initiatives for food processing.
I WORK AS AN ARTISAN WHO SPECIALISES IN JARI ART. MY DESIRE IS TO START MY OWN BUSINESS INSTEAD OF DOING OTHER PEOPLE’S JOBS. CAN MUDRA BE OF HELP TO ME?
If you want to start your own business, you can get help from any bank, non-bank financial institution, or microfinance institution (MFI) in your area that falls under the ‘Shishu’ category.
WORKING ON A FRANCHISE MODEL AND OPENING AN ICE-CREAM PARLOUR IS WHAT I INTEND TO DO. CAN MUDRA BE OF HELP TO ME?
MUDRA offers a customized refinancing programme for traders and shopkeepers that qualify. You can obtain the services offered by the programme through any banks, microfinance institutions, or non-bank financial companies (NBFCs) in the area, depending on your needs.
Adding more variety and designs to my pottery business is something I’d like to do in the future. WHAT KIND OF ASSISTANCE CAN I EXPECT FROM MUDRA?
You can obtain assistance under the ‘Shishu’ category from any banks, NBFCs, or microfinance institutions (MFIs) that are active in your region in order to start your own business.
WHAT IS THE SCOPE OF PMMY AND ARE THERE DIFFERENT TYPES OF LOANS AVAILABLE, AS WELL AS THE AGENCIES THAT WILL PROVIDE LOANS?
Loans under the Pradhan Mantri Mudra Yojana (PMMY) would be extended by all public sector banks, including PSU banks, Regional Rural Banks (RRBs), Small Finance Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions, and Non-Banking Finance Companies.
Unless otherwise specified, all loans sanctioned on or after April 8, 2015, for non-farm income-generating activities with a loan size of up to Rs. 10 lakh would be designated as PMMY loans.
Who will be in charge of overseeing the implementation of PMMY?
MUDRA/Department of Financial Services, Government of India, will monitor the development of the PMMY at the state level through the SLBC forum, and at the national level through the SLBC forum.
MUDRA has built a site for this purpose, through which banks and other lending institutions can submit their achievement details directly to the system, which is then consolidated and reports are generated for review.
IS THERE ANY SCHEME IN THE CENTRAL OR STATE GOVERNMENTS THAT IS APPLICABLE ACROSS THE WHOLE OF INDIA, WHERE LOANS WITHOUT GUARANTEE ARE APPROVED OR WHERE THE GUARANTORS’ IDENTITY IS CHECKED?
The Pradhan Mantri Mudra Yojana is a government-sponsored program that allows small borrowers to borrow from banks, microfinance institutions,
and non-bank financial companies (NBFCs) for loans up to Rs. 10 lakh for non-farm income-generating activities.
In most cases, loans up to 10 lakh offered by banks under the Micro Small Enterprises program are given without the need for collateral.
ARE OUR CARPENTRY AND RO WATER PLANT INSTALLATION ELIGIBLE FOR FINANCING? If so, what is the total amount of the loan, as well as the maximum and minimum amounts?
If the loan amount is up to ten lakh rupees, business and RO water plant installation on a commercial scale are eligible activities for a MUDRA loan.
An income-generating activity in the manufacturing, processing, commerce, and service sectors, as well as agri-allied activities, is the basic criteria for obtaining a MUDRA loan, and the loan amount can range from Rs. 10 lakh to Rs. 50 lakh in the sector.
What is the eligibility of individuals for MUDRA LOANS and how do they apply for them?
Any Indian citizen who has a business plan for a non-farm income-generating activity such as manufacturing, processing, trading,
or the service sector and who has a credit requirement of up to Rs. 10 lakh can approach a bank, microfinance institution, or non-banking financial institution (NBFC) to apply for MUDRA loans under the PMMY.
It is possible that the standard terms and conditions of the lending agency will have to be met in order to get loans under the PMMY program. The lending rates are determined in accordance with the recommendations set by the RBI in this regard from time to time.
DOES PMMY PROVIDE ANY FORM OF SUBSIDY? IF SO, WHAT ARE THE DETAILS?
The loan provided under PMMY is not subsidized in any way. However, if the loan application is related to a government program in which the government is providing a capital subsidy, it will be eligible for consideration under PMMY as well as other programs.
WOULD YOU PLEASE PROVIDE A SHORT PROFILE OF MUDRA?
Because MUDRA (which stands for Micro Units Development and Refinance Agency Ltd) is a refinance agency rather than a direct lending institution, it is not considered a direct lending institution.
MUDRA provides refinancing assistance to its intermediaries, which include banks, microfinance institutions, and non-bank financial companies (NBFCs), who are engaged in the business of lending for income-generating activities in the non-farm sector, such as manufacturing, processing, trading, or service sector, and who in turn finance the beneficiaries.
Do you have any information about the MUDRA CARD?
It is a new credit product that allows borrowers to obtain loans in an easy and flexible manner.
It will offer the borrower with a working capital arrangement facility in the form of a CC/OD loan agreement.
Because the MUDRA Card will be a RuPay debit card, it will be able to be used to withdraw cash from an ATM or Business Correspondent, as well as to make purchases at a Point of Sale (POS). As and when additional cash becomes available, there is also the facility to repay the amount borrowed, which helps to keep interest costs down.
WOULD THE PEOPLE OF THE KUMHAR COMMUNITY BENEFIT FROM THE PMMY IF THEY PERFORMED POTTERS WORK IN THEIR HOMES?
Yes. Kumhar Community will benefit from the PMMY as this is a sector initiative that aims to promote all types of income-generating activities in the manufacturing, processing, trading, and service industries.
Assistance under the Micro Credit Scheme can be obtained through any of the Microfinance institutions/Non-Banking Financial Companies/Banks that are currently operating in the area.
WHAT ARE THE DOCUMENTS THAT MUST BE SUBMITTED IN ORDER TO BE ELIGIBLE FOR LOANS UNDER THE MUDRA PROGRAM?
The loan’s terms and conditions would be governed by the rules of the lending institution as well as the broad guidelines of the Reserve Bank of India. It is possible to receive information about the documentation requirements by contacting any of the lending banks in your area.
IN THE EVENT OF A LOAN NOT BEING APPROVED, WHAT ARE THE OPTIONS FOR FIRING OFFICERS AT THE BANK AND HOW DO I FILE A COMPLAINT?
If there is any lapse on the part of the bank officials in approving the loan, any complaints against the non-consideration of the MUDRA loan can be registered with the higher authorities in the particular bank, such as the Regional Manager/Zonal Manager of the Bank.
Is it possible for you to elaborate on the specifics of the security that would be required in order to get MUDRA loans?
According to the recommendations of the Working Group established by the Reserve Bank of India for the purpose of reviewing the Credit Guarantee Schemes for Micro Small Enterprises, which were accepted by the RBI, banks have been instructed not to insist on collateral security in the case of loans up to Rs. 10 lakh extended to units in the Micro Small Enterprises sector.
DOES THERE avail A STANDARD FORMAT FOR APPLICATIONS TO GET MUDRA LOANS APPROVED?
Yes. In the case of the Shishu category, a one-page application format has been developed and made available on the MUDRA website for submission.
The indicative application format for the Kishor and Tarun categories has been prepared and is also available on the MUDRA website, which is three pages long.
CAN YOU EXPLAIN IN BRIEF THE REPAYMENT TERMS, ELIGIBILITY, AND ACTION PLAN FOR THE ASSISTANCE AVAILABLE FROM MUDRA?
The terms and conditions of the loan will be determined by the lending institution’s rules and regulations and the broad guidelines set forth by the Reserve Bank of India (RBI).
The loan request will be processed only on the basis of the merits of the proposal, according to the lending institution.
The amount of the loan will be determined by the requirements of the planned income-generating venture.
The repayment terms will be dictated by the cash flow of the firm, and the borrower’s eligibility will be determined by the lending institution’s eligibility criteria and regulations.
Are PMMY LOANS AVAILABLE AT ALL BANKS IN THE ENTIRE COUNTRY OF INDIA?
Yes. DFS has directed all public sector banks (PSBs), regional rural banks (RRBs), and small finance banks (SFBs) regarding the implementation of the PMMY and to cover all loans up to the loan amount of 10 lakh sanctioned on or after April 08, 2015, for income generation under the PMMY.
It has also issued a number of directives, including branch-level targets, to the banks’ head offices, which have been instructed to pass on these directives to their respective zonal, regional, and branch offices.
When will PMMY begin operations in the Gorakhpur Zone, and when will the SCHEME begin operations at the SBI Branch?
Loan disbursement under the PMMY programme began on April 8, 2015, across the country through all banks, including SBI, and will continue until further notice.
DOES THE MUDRA SCHEME REQUIRE ANY SPECIFIC TYPE OF LIFE INSURANCE POLICY?
For loans made under the PMMY programme, life insurance is not required. The terms and conditions of lending under the PMMY, on the other hand, are determined by the lending policy of the lending institution in question.
Is it necessary to have a PAN CARD in order to apply for PMMY LOANS?
The use of a PAN card is not required to avail of PMMY loans. The borrower, on the other hand, maybe required to meet the Know-Your-Customer (KYC) standards of the lending institutions.
WHAT IS THE AMOUNT OF INTEREST CHARGED ON MUDRA LOANS
Interest rates are no longer regulated, and banks have been instructed to charge fair interest rates within the framework of the Reserve Bank of India’s general rules.
WHAT SHOULD I DO IF THE LENDING INSTITUTIONS DO NOT GIVE PMMY LOANS?
The incident may be escalated to the upper levels of management at the relevant financial institution. For the loan demand, the applicant can potentially approach another bank or NBFC/MFI that is operating in the vicinity for assistance.
WHAT WOULD BE THE ACTION THAT COULD BE INITIALIZED AGAINST BANKS THAT INSIST ON SECURITY/COLLATERAL UNDER PMMY, BECAUSE IN SOME AREAS, ALL THE BANKS ARE INSISTING ON SECURITY/COLLATERAL? A COMPLAINT AGAINST THE BANK SHOULD BE FILED WHERE?
WHERE SHOULD A COMPLAINT AGAINST THE BANK BE FILED WHEN THE BANK DEMANDS SECURITY/COLLATERAL FOR LOANS UNDER THE PMMY?
The Regional Office/Zonal Office/Head Office of the particular bank can be contacted in order to submit a complaint against any bank branch in question. All information regarding the Banks’ Dispute Resolution Mechanisms will be available at the bank branch where the complaint was lodged.
ARE HANDICAPPED PEOPLE ELIGIBLE FOR PMMY LOANS AS WELL AS OTHER PEOPLE?
MUDRA loans can be obtained by any Indian citizen who meets the eligibility requirements and who has a business plan for an income-generating activity in mind. Yes Even Handicapped persons are also eligible for PMMY loans
The loan request should be for the establishment of a new Microbusiness firm or the upgrading of an existing Micro business enterprise in the manufacturing, processing, trading, or service sectors. You may also like our article related to the Aayushman Bharat Insurance Scheme of Government up to 500000 per year at 0 premium.
IF YOU APPLY FOR A LOAN OF TEN LAKH UNDER PMMY, DO YOU HAVE TO SUBMIT YOUR RETURNS FOR THE PAST TWO YEARS?
In most cases, small-value loans do not require IT returns to be completed. According to their own norms and policies, lending institutions, however, will determine whether or not they require certain documents from you.
IN THE CASE OF PMMY-SHISHU LOANS, WHAT IS THE TURN-AROUND TIME FOR PROCESSING THE LOAN PROPOSAL FORMALITY?
On average, the processing time for Shishu loans is 7 to 10 days after the loan proposal has been received with all of the necessary documents.
WHO ARE THE ELIGIBLE APPLICANTS UNDER THE PMMY APPLICATION PROCEDURES?
Applicants for PMMY loans who have a loan requirement of up to ten lakh rupees are eligible to apply, including women entrepreneurs, proprietorship businesses, partnership firms, private limited companies, and any other legal entities.
ARE MUDRA LOANS AVAILABLE FOR THE PURCHASE OF A CNG TEMPO/TAXI?
If the applicant plans to utilize the vehicle for commercial purposes, MUDRA loans would be available for the purchase of a CNG Tempo/Taxi.
I HAVE A SAVINGS BANK ACCOUNT WITH CORPORATION BANK, UNNARO, INDIA. WOULD LOANS UNDER MUDRA BE AVAILABLE IN ACCORDANCE WITH THE SB ACCOUNT?
Yes. To apply for a loan, the applicant should visit the branch and submit an application in the format specified by the lending institution.
Lending institutions will set their own terms and conditions for loans, which will be in accordance with the RBI’s broad principles as a starting point.
The amount and terms of the loan will be determined by the requirements of the proposed income-generating activity, and the projected cash flow from the activity will determine the loan payback conditions.
CAN KHADI ACTIVITY BE COVERED BY PMMY LOANS?. WHEN DOES PMMY LENDING APPLY?
Yes. MUDRA loans can be used for any activity that generates income. Khadi is one of the eligible activities under the Textile sector, and if MUDRA loans are accepted for the purpose of income generation, the loan can be used to cover the cost of the Khadi production.
“It is a refinancing institution, and it is based in the Philippines. Indirect lending to micro-enterprises and individuals is not provided by MUDRA. MUDRA loans under the Pradhan Mantri Mudra Yojana (PMMY) can be obtained via a nearby branch office of a bank, non-banking financial company (NBFC), a microfinance institution (MFI), or other financial institution. Udyamimitra portal now allows borrowers to submit online applications for MUDRA loans.
Please keep in mind that MUDRA does not use any agents or middlemen to facilitate the acquisition of Mudra Loans. It is recommended that borrowers avoid dealing with individuals posing as MUDRA/PMMY agents or facilitators.”
The Logo and Photos used in this article belong to the central government of India and the Mudra Website.