MUDRA Yojana Scheme
Imagine this—you have a brilliant business idea, maybe a food truck in your city or a tailoring shop in your village. You’re passionate, ready to work hard, but there’s just one problem: you don’t have the funds to get started. This is the exact gap the Pradhan Mantri MUDRA Yojana (PMMY) aims to fill.
Launched in 2015, PMMY is not just another government scheme—it’s a powerful tool to boost India’s grassroots entrepreneurship, particularly among small and micro enterprises. In this blog post, we’ll explore what MUDRA is, how it works, who it’s for, and most importantly, how you can apply.
What Is Pradhan Mantri MUDRA Yojana?
MUDRA stands for Micro Units Development and Refinance Agency. It’s a financial initiative by the Government of India under the Ministry of Finance to offer low-interest loans to micro and small businesses. The goal is simple: to support the “non-corporate small business segment” like artisans, shopkeepers, street vendors, small manufacturers, and service providers.
Key Features at a Glance:
- Loan Amount: Up to ₹10 lakhs
- Collateral: No collateral required
- Interest Rate: Depends on lender, but competitive
- Tenure: Usually up to 5 years
- Processing Fee: Nil or minimal
- Target Group: Non-corporate small businesses and startups
Why MUDRA Matters: A Real-Life Example
Take the story of Sunita, a 32-year-old woman from a small town in Maharashtra. She always had a flair for sewing and wanted to start her own tailoring business. Banks had previously turned her away due to lack of collateral. Through PMMY, she received a ₹2 lakh loan under the Kishor category. Within 18 months, she had a successful shop, employed two other women, and repaid her loan.
Sunita’s story is one of millions that highlight how MUDRA empowers the backbone of India’s economy—its small businesses.
Types of MUDRA Loans
MUDRA loans are divided into three categories based on the stage of the business:
🟢 Shishu Loan (Up to ₹50,000)
Ideal for entrepreneurs who are just starting their business journey. Think first-time vendors, tailors, food stall owners.
🟡 Kishor Loan (₹50,001 to ₹5,00,000)
Suitable for businesses that are already running and want to expand—maybe buying equipment or hiring more staff.
🔴 Tarun Loan (₹5,00,001 to ₹10,00,000)
For well-established small businesses that need larger capital for growth.
Each category is designed to suit different stages of a business lifecycle.
Eligibility Criteria for MUDRA Loan
Before you apply, ensure you meet these basic criteria:
- You must be an Indian citizen
- You should own a non-corporate, non-farm small/micro enterprise
- Your funding requirement must be below ₹10 lakhs
- Your business should be involved in manufacturing, trading, services, or agriculture-related activities
These loans are especially geared toward women entrepreneurs, SC/ST/OBC communities, and rural businesses—making financial inclusion a top priority.
How to Apply for a MUDRA Loan: Step-by-Step Guide
Step 1: Decide Your Loan Category
Based on your business stage, pick Shishu, Kishor, or Tarun. This determines the documents and application process.
Step 2: Prepare Your Documents
You’ll need the following:
- Identity Proof (Aadhaar card, PAN card)
- Address Proof (Voter ID, utility bill)
- Business Proof (Registration, GST, invoices, etc.)
- Bank Statement (Last 6 months)
- Passport-size photos
- Quotation for machinery/equipment (if applicable)
Step 3: Choose Your Lender
MUDRA loans are available at:
- Public and private sector banks
- Regional rural banks (RRBs)
- Cooperative banks
- Small Finance Banks
- NBFCs and MFIs
You can walk into any of these and ask for a MUDRA application form or apply online through their website.
👉 Tip: Use the official MUDRA portal (https://www.mudra.org.in/) to find authorized lenders.
Step 4: Fill and Submit the Application
Provide all details truthfully. Attach documents, business plan (if required), and submit to the bank.
Step 5: Wait for Verification and Disbursal
The bank will verify your details, and if everything checks out, your loan amount will be disbursed directly to your account.
Digital Channels to Apply for MUDRA
You can also apply through online platforms like:
- Udyam Portal (for MSME registration)
- Jan Samarth Portal (https://www.jansamarth.in/)
- Respective bank websites like SBI, HDFC, ICICI, etc.
This digital shift has made it easier for applicants to track their loan status and get faster approvals.
Interest Rates and Repayment Terms
Though MUDRA doesn’t fix interest rates (it’s left to individual banks), they’re usually quite reasonable—ranging from 8% to 12% per annum depending on your credit profile and lender.
The repayment tenure can go up to 5 years, with flexible EMIs.
MUDRA Card: An Extra Bonus
Once your loan is sanctioned, you also receive a MUDRA Debit Card—issued on the RuPay platform. This allows you to withdraw the loan amount as per your need, ensuring responsible spending and working capital flexibility.
How MUDRA Boosts India’s Economy
Let’s look at the impact through some numbers:
- Over ₹22.55 lakh crore sanctioned since inception (as of 2024)
- More than 45 crore loans disbursed
- 68% of beneficiaries are women
- 51% loans given to SC/ST/OBCs
(Source: MUDRA Annual Report & RBI Data)
This clearly reflects the scheme’s massive contribution to job creation, women empowerment, and rural development.
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