Indialends, 13 Apr 2021

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Pradhan Mantri Mudra Yojana

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The Pradhan Mantri Mudra Yojana was launched in April 2015 to enable the loan to Non- Banking Financial institutions, Microfinance institutions, commercial banks, cooperative banks, and small finance banks at low-interest rates to all eligible entities.

Eligibility criteria of Pradhan Mantri Mudra Yojana

To avail of the benefits of the Pradhan Mantri Mudra Yojana, the person should be a resident of India. This loan is given to those who are having a business plan related to the non-farming sector with income-generating activities like:

• Manufacturing
• Processing
• Trade
• Service Sector
• Or any other fields whose credit demand is less than ₹10 lakhs.

The Indian Citizen seeking MUDRA Loans under the PMMY Scheme will have to approach either an MFI, Bank, or NBFC to avail it.

Different types of Pradhan Mantri Mudra Yojana

• Shishu Loan: Up to 50,000
• Kishor Loan:  50,000-500,000
• Tarun Loan:  500,000-10,00,000

Aim of offering Mudra Loan

The Mudra loans are taken for various reasons which help in creating employment and generating income. The main purposes of taking MUDRA loans are: 

• Business loan for traders, shopkeepers, vendors, and other activities in the service sector
• Equipment finance for small enterprise units
• Working capital loan via MUDRA cards
• Transport vehicle loans

The interest rate applicable to Mudra Loan 

 The interest rate applies to Mudra Loan varies according to the profile of the applicant. Mudra loan is available in private and public sector banks. All the lenders have defined a certain set of guidelines based on which they are offering the interest rate to the loan applicants. They also scrutinize the business requirements of the applicant.

Documents required to apply for Mudra Loan:

• Duly filled application form
• Proof of Identity: Aadhaar card, Voter’s ID card, driving license, passport, etc.
• Proof of address: Utility bills (electricity bill, telephone bill, and so on), Aadhaar card, Voter’s ID card, passport, etc.
• 2 Passport size photographs of the applicant
• Case certificate
• Quotation of the commodity or items which are to be bought and used for the business

What are the key benefits of applying for a Mudra Loan?

• One can avail of financial and banking services both in rural and urban areas.
• The financial backing can be obtained by start-ups and micro-businesses
  
• The business loans are available even for the small amount that too at an affordable interest rate
• Under Pradhan Mantri, Mudra Yojana scheme, the credit guarantee of the borrower is taken by the government. So, in case, the borrower is unable to repay the amount borrowed, the responsibility for the loss is borne by the government.
• The shopkeepers, food vendors, and small business owners can make most of the scheme. The shopkeepers, food vendors, and small business owners can make most of the scheme.
• Financial aid is available in those areas where people do not have access to basic banking facilities.
• The repayment tenure of the scheme is up to 7 years.
• A refinance scheme can also be availed with designated lenders.
• Individuals who wish to generate income through micro-enterprise activities can avail of the Micro Credit Scheme.
• Collateral free loan
• The funds borrowed under the PMMY scheme can be used only for business reasons.

The MUDRA loan scheme is in collaboration with the “Make in India” campaign which the government has initiated to foster innovation, facilitate investment, improve skill development, and build the best manufacturing infrastructure in the country.

Benefits available under the Mudra Shishu category according to Atmanirbhar Abhiyan

The Indian Government under the Atmanirbhar Abhiyan recently announced certain benefits the MUDRA Shishu category will be eligible to receive. The benefits are:

• Relief of up to Rs.1,500 crore will be allowed to borrowers under the MUDRA Shishu category.
• Interest subsidy worth Rs.1,500 crore will be provided to MUDRA Shishu borrowers.
• Fast recipients are eligible for a discount of 2% on their interest rate for one year by the Government of India.