Mudra loans are offered by most leading banks in India to aid non-corporate, non-farm sector income generating microenterprises that require credit below Rs.10 lakh. Mudra loan interest rates range from 11.20% to 20%. Loan tenure is between 1 and 5 years.
|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 India||17.80%||1-4 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|
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
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.
The 2018-19 Union Budget meeting, led by the Finance Minister of India - Mr. Arun Jaitley, was commenced on 1 February 2018. To improve the financial condition of the country, this meeting focused on multiple sectors such as Micro, Small, and Medium Enterprises (MSME), agriculture and rural economy, infrastructure, finance, health, social security, education, tax, and others. The minister also concentrated on Mudra Loan offered under the Pradhan Mantri Mudra Yojana (PMMY).
Since its inception in April 2015, a total of 10.38 crore self-employed individuals have availed the benefits of Mudra Loan by withdrawing a total credit of Rs.4.6 lakh crore. Out of the total number of loans, 76% of the loan accounts belong to women while over 56% belong to individuals who are SC, ST, or OBC. As the scheme has exceeded the targets set for all the previous years, the Government has decided to set the target for Mudra Loan during the upcoming financial year of 2018-19 at Rs.3,00,000 crore.
The meeting also indicated that this year’s focus will be on Non-Bank Finance Companies (NBFC). When the MSMEs were struggling to receive financing after the country was hit by demonetisation, the NBFCs of India had stepped up to the task and provided financial aid to many. This not only helped MSMEs receive the monetary relief they required during a their time of need, but also proved that NBFCs are powerful vehicles that can be used to provide Mudra Loans to the masses. Keeping this in mind, the Finance Minister has also announced during the Union Budget that the eligibility criteria and refinancing policies for NBFCs will be reviewed to offer them better chances of providing loans.
In addition to MSMEs, Mudra Loans of Rs.10 lakh can also be availed for non-agricultural activities or projects that are partially aligned to agriculture such as poultry, dairy, bee keeping, and many more. Depending on the growth stage and credit requirements of the micro, small, or medium enterprise, an entrepreneur can avail 3 types of loans under PMMY - Shishu, Kishor, and Tarun.
Interest rates are dynamic and decided by the lending institution under broad guidelines from the RBI so as to keep the products cost effective.
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.
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.
No, these loans are not subsidised by the central or state governments.
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.
You can find the application forms online on the Mudra website or get one from any of the intermediaries.
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.
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.
Yes, the scheme has been active since April 8th 2015 throughout the country.
Lower amount Shishu loans are generally disbursed within 7-10 days while the other categories have processing times varying from lender to lender.
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