Multiple banks. Different interest rates. Call it a "conflict of interest".
Multiple banks. Different interest rates. Call it a "conflict of interest".
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  • Personal Loan BYTES FROM OUR KITCHEN

    Mudra Bank Loan (Pradhan Mantri Mudra Yojana)

    What is Mudra Loan?

    Pradhan Mantri Mudra Yojana is a new scheme under Micro Units Development and Refinance Agency for developing and refinancing activities that are relating to micro units. This scheme was announced while presenting the budget for the 2016 financial year. The main purpose of this loan is to provide funds to non-corporate small business sectors.

    What are Micro Units?

    Micro units are the small organizations, companies and start-ups in India. The most common observation about the micro units is that they lack funds to financial support their business.

    Micro Units Development and Refinance Agency Bank has been set up by the Indian Government to fulfil all the funding needs of the non-corporate small business. The responsibility of Micro Units Development and Refinance Agency Bank is to prepare and launch the policy guidelines and registration and regulation of Micro Finance Institution entities. They are also responsible to run a credit guarantee scheme and create a good architecture to serve micro business by offering financial assistance.

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    Categories of Pradhan Mantri Mudra Yojana

    The micro units are further classified based on their growth stage, development and funding requirements. The three categories are as follows:

    1. Shishu (child) Category:
    2. This category is for the start-ups that have just started out and are looking for loan. Loan cover offered to this category of micro units is Rs.50,000.

    3. Kishor Category:
    4. This is the category where the business has started but it is yet to be established. The loan cover offered to this category ranges from Rs.50,000 to Rs.5 lakh.

    5. Tarun Category:
    6. The business that have started and established themselves fall under this category. The loan might be to expand their business or to buy assets, etc. The loan cover offered to this category ranges from Rs.5 lakh to Rs.10 lakh.

    Eligibility criteria to avail Mudra Loan (Pradhan Mantri Mudra Yojana)

    The borrowers must be from the following Non-corporate Small Business Segment:

    • Proprietorship
    • Partnership firms
    • Small manufacturing units
    • Service sector units
    • Shopkeepers
    • Fruit or vegetable vendors
    • Truck operators
    • Food service units
    • Repair shops
    • Machine operators
    • Small industries
    • Food processors
    • Other industries in rural and urban areas.

    The Lender's Eligibility criteria is as Follows

    • The scheduled commercial banks in public and private sector must have 3 years of continuous track record and their net NPAs not exceeding 3%. To be eligible to lend the loan their minimum net worth is supposed to be Rs.100 crore and not less than 9% of CRAR.
    • The rural banks must have a net NPA within 3%. To be eligible to lend loan they must also have a profitable operation and must not carry any accumulated losses and CRAR more than 9% CRAR.
    • Micro Finance Institutions and Small Business Companies are eligible if they fulfil the requirements.

    What can Mudra Loan be availed for?

    Mudra loan can be availed for the following purposes:

    • Commercial vehicle loan
    • Car loan
    • Two wheeler loan
    • Loan for working capital requirement
    • Buying plant and machinery
    • Renovating the business space
    • Drop line overdraft or working capital loans or overdraft facility is provided to business groups and rural businesses.

    Application process to avail Mudra Loan

    To apply for Mudra Loan for all the categories, you will have to go through the following process:

    • The borrower who wishes to take a loan under the Mudra scheme must visit the closest private or the commercial bank.
    • The borrower will have to present the business idea with the loan application form along with the other documents required.
    • Borrower will then have to fill up all the formalities as per the bank instructions.
    • The loan will be sanctioned and made available after all of the above steps are completed.

    Documents required for Mudra Loan

    If the borrower wishes to take a vehicle loan under the Pradhan Mantri Mudra Yojana (Mudra Loan), he must submit the following documents:

    • The Pradhan Mantri Mudra Yojana application form that is duly filled.
    • Vehicle loan application form that is duly filled.
    • 2 passport sized photos of the borrower.
    • Photo identity proof and address proof and income proof.
    • Last 6 month’s bank statement.

    If the borrower wishes to take a business instalment loan under the Pradhan Mantri Mudra Yojana, he must submit the following documents:

    • Pradhan Mantri Mudra Yojana application form and Business Instalment loan application form that is duly filled.
    • Photo identity proof and address proof.
    • Proof of establishment.
    • Last 6 month’s bank statement.
    • Ownership proof or office and residence.
    • Proof of continuity of business.
    • Qualification proof.
    • Trade references.

    If the borrower wishes to take a Business Loans group and rural business credit under the Pradhan Mantri Mudra Yojana, he must submit the following documents:

    • Pradhan Mantri Mudra Yojana application form and Business Instalment loan or Rural Business Credit application form that is duly filled.
    • Photo identity proof, age proof and address proof.
    • Ownership proof of residence or office.
    • Business vintage proof.
    • Last 12 month’s bank statement.
    • Last 2 years Income Tax Return document.

    Pradhan Mantri Mudra Yojana (Mudra Loan) Application form

    The following details will have to be filled in the Pradhan Mantri Mudra Yojana (Mudra Loan Bank) application form:

    1. Enterprise name and category has to be mentioned for office use.
    2. Business information:
      1. Name of the enterprise
      2. Constitution if it is proprietary, partnership firm, private limited firm, limited company or if it is any other firm, then it has to be specified.
      3. Current business address
      4. Telephone and mobile number
      5. Email address
      6. Business activity that is existing and proposed.
      7. Date of commencement of business
      8. The registration number of the business
      9. Registered office address
      10. Social category that is either SC, ST, OBC or Minority community. If it is a minority community, then it must be mentioned.
    3. Information about the proprietor:
      1. Name
      2. Date of birth
      3. Sex
      4. Residential address
      5. Mobile number
      6. Academic qualification
      7. Experience in years
      8. ID proof and ID proof number
      9. Address proof and address proof number
      10. PAN card or DIN number
      11. Relationship with the officials or director of the bank, if any.
    4. Names of associate concerns:
      1. Name of the associate concern
      2. Address of the associate concern
      3. Bank that the associate concern is associated with.
      4. Nature of the associate concern
      5. Extent of interest as a proprietor, partner, director or investor in the associate concern
    5. Existing banking or credit facilities
    6. The following details must be filled:

      1. The type of facilities allowed
      2. Bank that the business is associated with
      3. Limit availed
      4. Outstanding amount
      5. Security lodged
      6. Asset classification status
      7. Customer ID
    7. Credit facilities proposed and the amount and the purpose and the details of the security offered must be mentioned in rupees.
    8. In case of working capital, the actual sales and projected sales information has to be clearly mentioned.
    9. In case of Term Loan requirement, the details of the machinery or equipment has to be provided. The details of the type of the machinery, purpose, supplier name, and cost of machine, contribution made by promoter and the loan required must be filled in.
    10. The past performance and future estimates of sales, profit and capital must be mentioned.
    11. Statutory obligations’ status has to be mentioned. The statutory obligations are:
      1. Registration under Shops and Establishment Act
      2. Registration under MSME
      3. Drug License
      4. Latest Sales Tax Return filed
      5. Latest Income Tax Returns filed
      6. Any other statutory dues that is outstanding.
    12. The final part is the declaration, which requires you to pin up 3 passport sized photographs and the signature of the proprietor, partner or director, whose photographs have been affixed.
    13. The borrower will get an acknowledgement slip that includes the following:
      1. Application number
      2. Date of application
      3. Loan amount requested
      4. Name of the applicant
      5. Signature of the applicant
      6. Signature and seal of the branch official

    Mudra Bank Loan FAQs

    1. What is the MUDRA/PMMY Scheme?

      MUDRA stands for Micro Units Development & Refinance Agency Ltd, and PMMY stands for Prime Minister MUDRA Yojana. Mudra is being established as a government refinancing and development institution and was announced in the Budget 2016-17. The scheme aims to give funding for non-farm and non-corporate small business entities through intermediaries that include almost all Banks, NBFCs and MFIs operating in India.

    2. What is the purpose of Mudra Scheme?

      Financial support has been found to be lacking for the Non-Corporate Small Business Sector (NCSB) which employs more than 120 million Indians. With 90% of the sector out of the formal finances sector, the informal sector has always been marginalized in the country. The Mudra initiative from the Government of India aims that bridging the gap for financing of NSCB initiatives. Currently, the Mudra falls under SIDBI with plans for enactment of a law for Mudra Bank in the future.

    3. Who will be targeted under the Mudra scheme?

      Mudra will be tasked with refinancing needs of NBFCs, trusts, societies, co-operative societies, section 8 companies, scheduled commercial banks, small banks and other rural banks that provide financing to small and micro business entities that are involved in services, trading or manufacture verticals.

    4. What does Mudra offer?

      Mudra offers three different loan schemes:

      • Shishu: loans up to Rs.50,000
      • Kishor: loans above Rs.50,000 and up to Rs.5 lakhs
      • Tarun: loans above Rs.5 lakhs and up to Rs.10 lakhs
    5. When does the Pradhan Mantri Mudra Yojana (PMMY) come into effect?

      All loans up to Rs.10 lakhs that have been sanctioned after 8th April 2015 and for income generating activities other than farm related fall under the PMMY loan scheme.

    6. Who should I approach for Mudra loans?

      The scheme has been released by the central government and different financial institutions are tasked to provide the loans as intermediaries. These include Public Sector Banks, Cooperative banks, Regional Rural Banks, Foreign Banks, Private Sector Banks, NBFCs and MFIs.

    7. Who oversees the operations under Mudra?

      SLBC forum in each state and Department of Financial Services will oversee operations in the national level. A unified portal for Mudra has already been established for tracking achievement details of all financial institutions that are disbursing loans under the scheme.

    8. What is Mudra Card?

      The Mudra Card is a comprehensive benefits providing card that offers working capital through CC/OD whenever needed. The card functions as RuPay Debit Card and may be used for withdrawing cash at ATMs or for making purchases through Point of Sale machines. You can also credit money into the card as and when there is surplus funds so as to reduce the quantum of interests.

    9. Who do I send grievance or feedback to?

      Any grievance, complaints or feedback can be taken up with the respective bank/NBFC/MFI’s higher authorities such as zonal or regional manager.

    10. A lending institution near my house has refused me loans under PMMY scheme. What do I do now?

      You can escalate the grievance to higher authorities within the lending institution or approach any other bank/MFI/NBFC in your neighbourhood.

      Check Mudra Loan Interest rates from different Lenders

      The interest rates on the Mudra Loans are decided individually by each lender. Check the rates from more than 33 lenders in India here

      Know more about Mudra Loan Eligibility

      Mudra Loans are meant for entities looking to invest in non-farm income generating activities which includes a broad range of activities and businesses. Check the eligibility requirements here.

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