Mudra Loan Interest Rates 2026

Micro Credit Scheme 

• This scheme is offered through the Micro Finance Institutions (MFIs) 

1. This scheme delivers credit of upto Rs. 1 lakh. 

1. Loans given by this scheme are for specific income generating micro enterprise/ small business activities. 

Refinance Scheme 

1. Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks, Non-Banking Financial Companies (NBFCs) are eligible to avail refinance support from MUDRA for financing micro enterprises. 

1. These schemes finance for term loan and working capital loan of up to Rs. 20 lakhs. 

1. These banks refinance loans from MUDRA and deliver them for MUDRA compliant activities under Shishu, Kishore, Tarun and Tarun Plus categories. 

Schemes under Mudra Loan 

Various schemes have been developed under the Pradhan Mantri MUDRA Yojana (PMMY) to cater to the dynamic needs of each microenterprise. Given below are the interventions under the MUDRA Yojana along with the loan quantum offered by them:  

1. Shishu: This scheme covers loans up to Rs. 50,000. This is an excellent scheme for new startups needing basic raw materials.  

1. Kishore: This scheme funds between Rs. 50,001 and Rs. 5 lakhs. This scheme is designed to help active businesses purchase machinery. 

1. Tarun: This scheme covers loans from Rs. 5 lakhs to Rs. 10 lakhs. It is very useful for established enterprises to set up new units. 

1. Tarun Plus: Loans between Rs. 10 lakh and Rs. 20 lakhs can be availed through this scheme. This scheme is available to businesses that have repaid a previous Tarun loan. 

Compare MUDRA Loan Interest Rates by Banks in India (2026)

The Mudra Loan interest rates by banks are as listed below:

Note: The above-listed interest rates are as on 10 May 2025 and are subject to change at the bank’s discretion.

Features and Benefits of MUDRA Loan

The listed below are some of the features and benefits of MUDRA Loan: 

• No Collateral: To avail yourself of a MUDRA loan, you do not have to submit any collateral. 

• Easy Access to Credit: Small businesses which often find it difficult to get a loan from the bank can easily access funds through MUDRA. 

• Nominal Processing Fee: The processing fee charged for availing a MUDRA loan is either zero or nominal, which makes it affordable for the borrower. 

1. Extended Repayment: Mudra loans can extend repayments for up to seven years. 

1. Additional Benefits: Female borrowers can receive discounted interest rates 

Purpose of a MUDRA loan 

The primary objective of this scheme is to promote entrepreneurship among the youth and upcoming generation. This loan is available for a variety of purposes. Even below are some of the purposes for which the MUDRA loan is extended for: 

• Working Capital: MUDRA loans are good at providing working capital for daily operations. 

• Commercial Vehicles: Entrepreneurs can purchase commercial vehicles for goods transport. 

• Allied Agriculture: The scheme supports allied agricultural activities like dairy farming. 

• Manufacturing Machinery: Business owners can use the funds to buy new manufacturing machinery. 

• Retail Shops: MUDRA loans are good at helping set up small retail shops. 

Eligibility Criteria to Apply for a MUDRA Loan

You need to fulfill the listed below eligibility criteria to apply for a MUDRA loan: 

• Applicant Types - Any individual, proprietorship firms, partnership firms, private limited companies, public companies, or any other legally recognised entity can apply for a MUDRA loan. 

• Financial Standing - You should not be a defaulter with any bank or financial institution and must have a good credit history. 

• Individual Requirements - If you are an individual borrower, you may need to show that they have the skills, experience, or knowledge required for the business activity. 

• Educational Qualifications - You may be required to possess the related educational qualification depending on the type of business and its specific requirements. 

Documents Required to Apply for a MUDRA Loan

Youn need to provide the listed below documents to avail yourself of a MUDRA Loan: 

• Proof of Identity: Voter ID, Driving Licence, PAN Card, Aadhaar Card, Passport, or any Govt. issued photo ID 

• Proof of Residence: Utility Bills, Voter ID, Aadhaar Card, Passport 

• Proof of Business: License or Registration Certificates, Ownership documents. 

• Proof of Income: Bank Statements, ITR, Form 16, etc. 

• Photographs: Multiple copies of recently clicked passport-sized photographs. 

• Business-related documents: Quotation of machinery/items to be purchased (with supplier details, price, etc.) 

Note: The documents listed above are in general and you may be requested to submit additional documents based on your loan application, quantum of loan, and internal policies of the lending institution. 

How to Apply for a MUDRA Loan?  

Eligible candidates can apply for a MUDRA Loan either through offline or online methods. Given below are the steps you must follow for applying through online or offline methods: 

Online method: 

Step 1: Go to the PSB Loans website.  

Step 2: Click on ‘Login’ and then select ‘Register’.  

Step 3: Fill in your details and complete the registration.  

Step 4: Choose ‘Mudra Loan’ and click ‘Apply Now’.  

Step 5: Fill out the form, upload the required documents, and submit it.  

Step 6: Once approved, submit the application to the bank for loan disbursal.  

Offline method: 

Step 1: Visit a bank or financial institution that offers Mudra loans.   

Step 2: Ask for the Mudra loan application form.  

Step 3: Fill in the form and attach the required documents.   

Step 4: Submit the form. The bank will check it and release the loan amount if approved.  

Tips to Avail MUDRA Loan at Low Interest Rates

To secure a MUDRA loan with a low-interest rate, follow these suggestions:

1. Compare Loan Deals: Check and compare offers from various banks and NBFCs.
2. Business Nature and Type: The type and nature of your business influence the interest rates. Businesses with lower risk profiles receive lower rates.
3. Annual Turnover & Volume: Higher annual turnover and business volume can result in lower interest rates.
4. Creditworthiness: Applicants with good credit scores and repayment capabilities are preferred.
5. Income & Loan Amount: Your income, the amount of the loan, and the repayment tenure also affect interest rates.
6. No Previous Loan Defaults: A clean loan repayment history gives you an advantage.

For exact interest rates, contact the eligible bank or NBFC directly or visit their official websites.

Institutions Authorised to Offer MUDRA Loans

Loans under the Pradhan Mantri Mudra Yojana (PMMY) can be availed through eligible Member Lending Institutions (MLIs). These include:

• Public Sector Banks

• Private Sector Banks

• State-operated Cooperative Banks

• Regional Rural Banks

• Micro Finance Institutions (MFIs)

• Non-Banking Finance Companies (NBFCs)

• Small Finance Banks (SFBs)

• Other financial intermediaries approved by Mudra Ltd. as member financial institutions.

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