How To Apply For Pradhan Mantri Mudra Yojana Loan Scheme?

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The Pradhan Mantri Mudra Yojana (PPMY) was launched with a motive to "fund the unfunded." The scheme enables citizens to avail loans for non-farm activities from Public Sector Banks (PSB), Regional Rural Banks (RRB), Co-operative Banks, Private Banks, Foreign Banks, Micro Finance Institutions (MFI) and Non-Banking Finance Companies (NBFC).

The idea is to provide affordable credit to Non-Corporate Small Business Sector. It was launched in April 2015.

Features of Mudra Loan

  • Mudra is short for Micro Units Development & Refinance Agency Ltd.
  • There are three types of Mudra loans based on the growth stage of the activity which needs funding and the amount.
  • The maximum amount that can be borrowed is Rs 10 lakhs.
  • These loans have no subsidy. If the loan's proposal is linked to another government scheme with capital subsidy provision, it will be eligible under Pradhan Mantri Mudra Yojana too.
  • No processing fee will be charged.
  • No collateral is needed.
  • The repayment period of loan is extended up to 5 years.
  • The interest rate is less than other business loans and is set by the RBI.


Eligibility for Pradhan Mantri Mudra Yojana

The facility of Mudra loan is restricted to:

  • Indian citizens, proprietary concern, partnership firm, private limited company or any other entity.
  • Non-farm business like small manufacturing units, service sector units, shopkeepers, fruits / vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors in both rural and urban areas. 
  • Credit need upto Rs 10 lakhs.
  • Applicants who are not defaulters of any financial Institution.

Types of Mudra loan

  1. Shishu: Loans upto 50,000
  2. Kishor: Loans above 50,000 and upto 5 lakh
  3. Tarun: Loans between 5 to 10 lakhs

The loans are categorised to differentiate the various stages of funding or development of the beneficiary's business unit. It also helps the government to provide a reference point of separation so that 60% of the funds go to Sushi category of units.



Keeping in mind the differential needs of the specific businesses, they are categorized based on higher concentration of businesses in some areas:

  • Land transport/activity: Purchase of auto rickshaw, small goods transport vehicle, 3 wheelers, e-rickshaw, passenger cars, taxis, etc. for income generation. Units related to supporting land transport too.
  • Community, social and personal service: Beauty parlours, gymnasium, boutiques, tailoring shops, dry cleaning, cycle/motorcycle repair shop, photocopying facilities, courier service, medicine shops, etc.
  • Food Products: Food production units for like pickles,biscuits, or cold storages or even agricultural produce at a rural scale. 
  • Textile Products: Garment producing units, or garment accessorizing facility.
Also, MUDRA operates a special refinance scheme for women entrepreneurs; viz; Mahila Uddyami Scheme. An interest rebate of 25 bps is available for women borrowers availing of loans from MFIs/NBFCs.

How to apply for Mudra Loan?

You can walk up to any local bank in your area and apply for the Mudra loan. You can also avail the loan from Micro Finance Institutions (MFI) and Non Banking Finance Companies (NBFC). The KYC document requirements can vary as per the institution providing the loan but ideally you will require:

  • Proof of identity: Aadhard card or any government provided ID.
  • Proof of address: Aadhar card, utility bill, bank passbook of individual/business, domicile certificate, etc.
  • 2 recent passport size photos.
  • Quotation citing your financial requirement plan for machinery and assets.
  • Name of the supplier of the items to be purchased.
  • Proof of SC/ST/OBC or minority.

Monitoring of Pradhan Mantri Mudra Yojana

Monitoring of PMMY progress at the State level will be done through SLBC forum and at National level by MUDRA/Department of Financial Services, Government of India.

For this purpose, MUDRA has developed a portal, wherein the banks and other lending institutions directly feed their achievement details which is consolidated by the system and reports are generated for review.

You can visit their official website

Mudra Card

MUDRA Card is an innovative credit product wherein the borrower can avail of credit in a hassle free and flexible manner. It will provide a facility of working capital arrangement in the form of CC/OD to the borrower.

Since MUDRA Card will be RuPay debit card, it can be used for drawing cash from ATM or Business Correspondent or make purchase using Point of Sale (POS) machine.

There is also a facility to repay the amount, as and when, surplus cash is available, thereby reducing the interest cost.


Story first published: Saturday, March 10, 2018, 12:40 [IST]
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