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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    Mudra Loan Interest rates

    What is PMMY?

    Pradhan Mantri Mudra Yojana is a special scheme set up by the Government of India through an institution named Micro Units Development & Refinance Agency Limited (MUDRA) in order to provide financing aid through loans to the non-corporate non-farm sector income generating activities of micro and small entities (subject to those enterprises with credit needs below INR 10 lakhs).

    The Pradhan Mantri Mudra Yojana (PMMY) has three facilities or options available for catering to enterprises at different stages of growth and financing needs. These options are Shishu, Kishore and Tarun.

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    Pradhan Mantri Mudra Yojana (Mudra Bank Loan) Interest rates

    Mudra Loan Interest rates

    The loans availed as per this scheme can be used for multiple purposes, like vehicle loans for automobiles meant for commercial purposes, business instalment loans that can aid in working capital financing / purchase of plant and machinery / renovating the infrastructure and/or business loans group and rural business credit.

    As per the financing options available under the scheme, the interest rates and loan limits vary to accommodate for the growth stage of the concerned enterprise availing the loan. As of November 2015, the applicable rates and limits are as follows

    1. Shishu – Loans up to a maximum of INR 50000 with rate of interest being 1% per month or 12% per annum. Repayment period up to 5 years
    2. Kishore – Loans exceeding INR 50000 up to INR 5 lakhs. The rate of interest will be dependent on the bank, in accordance with the schemes guidelines, keeping the credit history of the applicant in view. Repayment period based on the discretion of the bank
    3. Tarun – Loans exceeding INR 5 lakhs up to INR 10 lakhs. The rate of interest will be dependent on the bank, in accordance with the schemes guidelines, keeping the credit history of the applicant in view. Repayment period based on the discretion of the bank

    It is clear from the above mentioned points that the first option which caters to budding businesses has the most affordable rates and a fixed repayment term irrespective of the applicant’s or the business’ performance and history. The above, however are subject to change based on the scheme’s guidelines.

    A total of 27 Public Sector Banks, 17 Private Sector Banks, 31 Regional Rural Banks, 4 Co-operative banks, 36 Microfinance Institutions and 25 Non-Banking Financial Institutions have currently been selected to allow disbursement of this loan. 60% of the loans under this scheme are set to be offered through the ‘Shishu’ option and the rest 40% will be through the ‘Kishore’ and ‘Tarun’ schemes.

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    Mudra Loan Interest rates 2017 (Updated)

    Mudra Loan Bank Interest rate Tenure
    HDFC 12.75% to 20% 1-5 years
    HDBFS 15.95% to 18.95% 1-3 years
    Tata Capital 13.49% to 19.50% 1-5 years
    Kotak Mahindra Bank 11.5% to 18% 1-5 years
    Capital First 13% to 20% 1-5 years
    Citibank 12.75% to 15.75% 1-5 years
    IndusInd Bank Ltd 12.99% to 18.25% 1-5 years
    Fullerton 19.50% to 37% 1-4 years
    Standard Chartered Bank 12.50% to 17% 1-5 years
    ICICI Bank 11.49% to 17.50% 1-5 years
    Aditya Birla Finance Ltd 14% 1-3 years
    Allahabad Bank 13.70% 1-5 years
    Bank of Baroda 14.15% 1-3 years
    Bank of Maharashtra 15.20% 1-3 years
    Bank of India 12.7% to 14.7% 1-3 years
    Canara Bank 13.65% 1-3 years
    Central Bank 12.70% 1-3 years
    Dena Bank 13 % to 14% 1-3 years
    IDBI Bank 12.75% to 13.75% 1-5 years
    Indian Bank 12.65% to 13.65% 3 years
    Indian Overseas Bank 14.70% 1-5 years
    Karur Vysya Bank 13.9% to 16.40% 1-3 years
    Oriental Bank of Commerce 11.2% to 12.95% 1-5 years
    South Indian Bank 14.80% 1-4 years
    State Bank of Bikaner and Jaipur 13.2% to 14.2% 1-5 years
    State Bank of Hyderabad 15.25% to 15.75% 1-3 years
    State Bank of India 17.80% 1-4 years
    State Bank of Mysore 16.90% 1-3 years
    State Bank of Patiala 12.65% to 14.65% 1-5 years
    State Bank of Travancore 13.2% to 13.45% 1-5 years
    Tamilnad Mercantile Bank 14.4% to 16.4% 1-5 years
    UCO Bank 14.1% to 15.1% 4-5 years
    Union Bank of India 14.4% 1-5 years
    Vijaya Bank 13.7% 1-5 years
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    The Highlights of the Union Budget 2017-18 on Pradhan Mantri Mudra Yojana (Mudra Loan)

    While presenting the changes made in the Union Budget Meeting 2017-2018, the Finance Minister of India, Arun Jaitley announced that the lending target under the Pradhan Mantri Mudra Yojana has been doubled and is fixed at Rs.2,44,000 crore. Pradhan Mantri Mudra Yojana is a scheme under the Micro Units Development and Refinance Agency Bank which was set up for developing and refinancing the micro units in India. The Finance Minister further stated that the scheme is performing really well in terms of funding the unfunded and the under-funded micro units in India. This time, priority will be given to Dalits, tribals, backward classes, women, and other minorities. During the meeting, Arun Jaitley also spoke about the Stand Up India Scheme which was set up to encourage tribal, women, and Dalit entrepreneurs to set up greenfield enterprises across the country. He said that so far the scheme has attracted 16,000 new enterprises in various sectors like food processing, garment industry, and others.

    Mudra Loan Interest rates FAQs

    1. What is the interest rate under the Mudra/PMMY Scheme?

      Interest rates are dynamic and decided by the lending institution under broad guidelines from the RBI so as to keep the products cost effective.

    2. What is the target audience for Mudra Scheme?

      Mudra is targeted at Non-Corporate Small Business (NCSB) segment that includes business entities such as small manufacturing plants, shopkeepers, service sector installations, vegetable/fruit vendors, repair shops, truck operators, food-service units, artisans, machine operators, small industries, food processors etc.

    3. Why are the interest rates different for different institutions?

      Mudra loans are unsecured in nature as no collaterals are required to avail the loan. This is a reason why interest rates vary from institution to institution as every organization calculates the risk factor on its own and establishes rates accordingly.

    4. Are the loans subsidised by the central government?

      No, these loans are not subsidised by the central or state governments.

    5. What does the Mudra application form look like?

      For the starting category of Shishu Loans, a 1 page application form needs to be duly filled and submitted. For Kishor and Tarun categories of loans, a 3 page application form needs to be submitted.

    6. Where can I find the Mudra Loan application forms?

      You can find the application forms online on the Mudra website or get one from any of the intermediaries.

    7. What is the repayment criteria for Mudra Loans?

      The repayments terms and conditions are decided by the intermediary lending institution according to its rules considering the cash flow of the business in question.

    8. Do all banks in India fall under the Mudra Scheme?

      Yes, the Department of Financial Services (DFS) has already sent advisories to Public Sector Banks, Scheduled Commercial Banks and Regional Rural Banks for bringing all loans up to Rs.10 lakhs disbursed for non-farm income generation activities after April 7th 2015 under the Mudra Scheme. The DFS has also instructed all banks to provide loans under the scheme and put targets per branch.

    9. Is the PMMY Scheme active now?

      Yes, the scheme has been active since April 8th 2015 throughout the country.

    10. How long is the processing time for Loans under the Mudra Scheme?

      Lower amount Shishu loans are generally disbursed within 7-10 days while the other categories have processing times varying from lender to lender.

      Know more about Mudra Loan

      Mudra loan is a new scheme from the Government of India that aims to rejuvenate the refinancing sector for micro units enterprises. Learn more about the Mudra Bank Loan here.

      Know more about Mudra Loan Eligibility

      Mudra loans come with minimal eligibility requirements as the aim is to empower the business community at the margins. Learn more about the eligibility requirement for Mudra Loans here.

    News About Mudra Loan Interest Rates

    • Mudra Loans worth Rs.217 Crore disbursed in Nagaland

      Pankaj Kumar, Chief Secretary of the state of Nagaland recently revealed that loans worth Rs.217 crores have been provided to 17,825 beneficiaries under the MUDRA (Micro Units Development & Refinance Agency) scheme. The Pradhan Mantri Mudra Yojana is aimed at helping non-corporate small and medium businesses to meet their financial needs. Mudra Yojana includes a 3-tier structure (SHISHU, KISHOR and TARUN), intended to support businesses based on their scale of operations. The Nagaland government also organised a financial inclusion and promotion camp on October 17 where loans worth Rs.4016 crores were distributed under the SHISHU category.

      23rd October 2017

    • Finance Minister aims to have Mudra Camps from Varanasi

      The finance ministry of India aims to enhance the self-employment opportunities and hence, is working towards conducting Mudra Promotion camps in the entire nation. The ministry plans to start this programme from Varanasi, the Prime Minister’s constituency. Under this exclusive programme, 50 camps will be organised from September 27th to October 17th. There will be one camp in each state capital. These camps will also make arrangements for digital payment methods for allowing individuals to make transactions from any place. The programme also intends to spread awareness about financial inclusion instruments. Apart from these objectives, the camps will increase knowledge among people about social security schemes in the nation.

      25th September 2017

    • MLA of Mohali suggests that banks must provide loans to youth

      Balbir Singh Sidhu, the Local Legislator of Mohali, recently addressed a consultative committee meeting of banks which was held at a district-level. During his speech, he mentioned that all banks must offer loans to youth for self-employment purposes. He also mentioned that these banks should spread awareness about Rupay Card Jan Suraksha Yojna, Pradhan Mantri Mudra Yojna, Atal Pension Plan, Avaas Yojna, National Urban Livelihood Mission, Pradhan Mantri JanDhan Yojna, RSETI, Self Help Groups, Stand up India Program, etc. Gurpreet Kaur Sapra, Deputy Commissioner, stated that camps for financial awareness and financial education should be conducted in villages on a regular basis and detailed reports about these camps should be sent to the office of the deputy commissioner.

      15th September 2017

    • Mudra Loans soon going to have an online platform

      The CEO of Micro Units Development & Refinance Agency Ltd (MUDRA) said that the organisation is soon going to have an online platform in order to assist micro units obtain MUDRA loans for their multiple activities and processes. This online platform intends to make the application process for MUDRA loans convenient and quick. It also has an exclusive analytics tool that supports lenders in acquiring proper information about borrowers. During this fiscal period, the organisation disbursed loans worth Rs.70,000 crore. The target for disbursal of MUDRA loans is fixed at Rs.2.44 lakh crore. The CEO of MUDRA said that this target is easily attainable.

      12th September 2017

    • More Women Beneficiaries under Mudra Loan, Says Report

      According to the latest data released by Finance Ministry, around 78% of all Mudra loans beneficiaries are women entrepreneurs. They have received half of the Rs.3,55,590 crore that has been sanctioned under the scheme till date. Loans amounting to Rs.1,78,313 crore has been sanctioned to self-employed women running businesses such as food parlours, bakeries, paper products, personal care and hairdressing, etc. 23% of the sanctioned loan went to people from the OBC section, 10.5% to people identifying as SC (scheduled castes), and 3% to people from ST (scheduled tribes). The Pradhan Mantri Mudra Yojana (PMMY) Scheme, extends loans to small and micro businesses via banks, Microfinance Institutions (MFIs) and Non-Banking Financial Companies (NBFCs), providing loan amount of up to Rs.10 lakh for manufacturing, trading, processing, and agriculture allied services/activities. In the 2016-17 fiscal year alone, Rs.1,80,528 crore has been sanctioned under PMMY, exceeding the target of Rs.1,80,000 crore.

      2nd August 2017

    • Loans worth Rs.925 Crores Sanctioned to 2.75 Lakhs Small Entrepreneurs under the PM’s Mudra Yojana

      In Nagpur district, loans worth Rs.925 crores is sanctioned to more than 2.75 lakh small entrepreneurs under the Mudra (Micro Units Development and Refinance Agency) Yojana scheme introduced by the Prime Minister of India in April last year. Sachin Kurve, District Collector, stated that the nationalised banks have been motivated to provide these loans under the Mudra Scheme to youths in the country for starting new businesses. Under this initiative, loans ranging from Rs.50,000 to Rs.10 lakh are provided to budding entrepreneurs who wish to start a range of business including honey bee breeding, dairy products, and agri-based industry. This initiative aims at funding the 65% of the Indian population who are less than 35 years of age to start a new business.

      27th March 2017

    • Launch of new portal for Mudra loans

      The Union Minister Smriti Irani unveiled a new portal that would enable banks to provide financial assistance through the Mudra (Micro Units Development and Refinance Agency) loan to handloom weavers electronically. Banks will credit the loan amount directly to the accounts of the beneficiaries. The credit guarantee fee and interest subvention will also be deposited to the bank account. The portal will be functional from 1st April, 2017, and it will enable weavers to keep a track of their loan applications. Efforts are on to link all banks to the portal.

      The portal has been developed by the Ministry of Textiles, in alliance with the Punjab National Bank. Irani pointed out that women form a large portion of the beneficiaries under the Mudra loan scheme. RuPay cards are issued to beneficiaries to help them withdraw a loan amount up to Rs.50,000

      10th March 2017

    • Pradhan Mantri Mudra Yojana lending target set at Rs.2.44 lakh crore this fiscal year

      he Pradhan Mantri Yojana target has been doubled to Rs.2,44,000 crore. He quoted that there has been a significant contribution from the scheme to the funding of the under-funded and unfunded. The scheme exceeded last year’s target of Rs.1.22 lakh crore. Mr. Jaitley also added that tribals, backward classes, Dalits, women, and minorities will be given priority. He also said that more than 16,000 new enterprises have risen in diverse activities like garments, food processing, diagnostic centres, etc. with the help of the Stand up India scheme.

      3rd February 2017

    • MUDRA Scheme to now be made available to fishers

      Bank of Baroda, which is mainly occupied in providing services such as corporate banking, international banking, personal banking, and treasury services apart from various other services, has opened a new branch in Whitefield, Bengaluru. K. Venkateswarlu, General Manager of Bengaluru zone, inaugurated the new branch. Holding a solid domestic existence with 5,377 branches and 8,975 ATMs, Bank of Baroda is looking forward to serving people with various banking solutions.

      18th January 2017

    • Banks Directed to Step up MUDRA loans in Backward Areas

      Under the Pradhan Mantri Mudra Yojana (PMMY), commercial banks operating in the state of Odisha have sanctioned and disbursed MUDRA loans amounting to Rs.5,436 crore in 2015-16. The MUDRA loan scheme consists of three different segments: Sishu, Tarun and Kishore. So far, 23.43 lakh people have benefited from the loan scheme. Dharmendra Pradhan, Minister of State for Petroleum and Natural gas, has expressed his disappointment in the performance of the private banks, regional rural banks and public sector banks in disbursing small loans when compared to the performance of non-banking financial companies and micro finance institutions. Data indicates that only 35% of small loans have been disbursed to poor entrepreneurs. The Union Minister has now directed banks to increase the credit to women, youth and poor entrepreneurs. The target percentage to achieve in this financial year is at least 45%.

      21st November 2016

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