Pradhan Mantri Mudra Yojana

Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Hon’ble Prime Minister on April 8, 2015 for providing loans up to Rs10 lakh to the non-corporate, non-farm small/micro enterprises. There is no collateral or security required by the banks. The repayment tenure is from 3 years to 5 years.

Within the framework and overall objective of development and growth of micro enterprises sector, MUDRA Loans are so designed, to meet requirements of different sectors / business activities as well as business / entrepreneur segments. Mudra loans are offered under PMMY with the help of Public and Private Sector Banks, Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) and Regional Rural Banks (RRBs).

Key Features of Pradhan Mantri Mudra Yojana (PMMY)

There are three Categories of the MUDRA loans based on the stated parameters making the business viable.

  1. Sishu :
  2. => To provide finance for machinery.
    => Valid quotation and supplier details are essential.

    The maximum loan sanctioned under this category is Rs.50000.

  3. Kishor :
  4. => The existing balance sheet for the previous two years.
    => Bank account statement.
    => Income and sales returns.
    => Estimated balance sheet for the current year.
    => Technical and economic viability of the project.

    The maximum loan sanctioned under this category is Rs.Rs.50001 to Rs.5 lakhs.

  5. Tarun :
  6. => All the requirements listed for Kishor Mudra Loan.
    => Address and Identity proof.
    => Caste certificate, if eligible for reservation.

    The maximum loan sanctioned under this category is Rs.500001 to Rs.10 lakhs.

Rate of Interest for Pradhan Mantri Mudra Yojana (PMMY)

The interest rate applied on MUDRA loans are based on RBI defined MCLR (Marginal Cost of Lending Rate) with the following break-up.

Up to Rs.50000:

  •   Micro Enterprises: MCLR + SP
  •   Small Enterprises: (MCLR + SP) + Bank Load

Above Rs.50000 up to Rs.2 lakhs:

  •   Micro Enterprises: (MCLR + SP) + Bank Load
  •   Small Enterprises: (MCLR + SP) + Bank Load

Above Rs.2 lakhs up to Rs.10 lakhs:

  •   Micro Enterprises: (MCLR + SP) + Bank Load
  •   Small Enterprises: (MCLR + SP) + Bank Load

Eligibility for Pradhan Mantri Mudra Yojana (PMMY)

Enterprises and entities falling under the following categories comprise MUDRA loan eligibility.

  1. All non-corporate non-farm enterprises.
  2. Under “Micro Enterprises” and “Small Enterprises” segment.
  3. Engaged in “income generating activities”.
  4. Engaged in “manufacturing, trading and services“.
  5. whose “credit needs are up to Rs.10.00 lacs”.

Now allied agriculture activities have also been included under PMMY scheme w.e.f. 01.04.2016.

Benefits of Pradhan Mantri Mudra Yojana (PMMY)

Here are the following benefits of the Pradhan Mantri Mudra Yojana:

  1. The Mudra loan scheme offers credit facilities to micro and small enterprises engaged in income generation.
  2. One of the key benefits of a Mudra loan is that borrowers are not required to provide security or collateral. Additionally, there are no processing charges on Mudra loans.
  3. There are no processing charges for availing of the loan.
  4. The credit facilities extended under the PMMY can be for any type of fund or non-fund based requirements. Hence, borrowers can use the Mudra loan scheme for a variety of purposes. The credit from Mudra loans can be used for term loans and overdraft facilities, or to apply for letters of credit and bank guarantees.
  5. The loans can be in the form of term loans, overdraft facility, letters of credit or bank guarantees, thus catering to a wide array of requirements.
  6. The Mudra loan scheme does not prescribe any minimum amount.

Documents Required to Enroll for Pradhan Mantri Mudra Yojana (PMMY)

  1. Business Plan.
  2. 2 passport-sized photographs.
  3. KYC Documents of applicant, partners, co-applicants, if any.
  4. Identity Proof.
  5. Age Proof.
  6. Residence Proof.
  7. Income Proof.
  8. Business Licenses, registrations and certificates, if any.
  9. Business Address Proof.
  10. Proof stating applicant falling in SC/ST or OBC category.

Purpose of Pradhan Mantri Mudra Yojana (PMMY)

  1. Business loan for Vendors, Traders, Shopkeepers and other Service Sector activities.
  2. Working capital loan through MUDRA Cards.
  3. Equipment Finance for Micro Units.
  4. Transport Vehicle loans – for commercial use only.
  5. Loans for agri-allied non-farm income generating activities, e.g. pisciculture. bee keeping, poultry farming, etc.
  6. Tractors, tillers as well as two wheelers used for commercial purposes only.