PM Mudra Loans (PMMY), From Rs 50,000-To-10,00,000: Easy To Access, Steps To Apply

Pradhan Mantri MUDRA Yojana (PMMY) aka PM Mudra Loans is a government scheme that helps common man achieve their dreams of starting his businesses. It can be anyone as small as vegetable vendors, fruit sellers repair shops, and PM Mudra Loans are put in place to meet the financial needs of starting small-scale businesses. Loans are offered in three categories, starting as low as Rs 50,000 to as high as Rs 10,00,000 under Mudra loans.

Here are some key FAQs to know about PM Mudra Loans:

What Is PM Mudra Loans?

The MUDRA in PMMY stands for Micro Units Development & Refinance Agency Ltd and is a financial institution set up by the Government of India for the development and refinancing of micro units enterprises. The scheme's purpose is to provide funding to the non-corporate small business sector through various Mile Financial Institutions like Banks, NBFCs and MFIs.

According to the government website, the biggest bottleneck to the growth of entrepreneurship in the Non-Corporate Small Business Sector (NCSBS) is the lack of financial support for this sector. More than 90% of this sector does not have access to formal sources of finance.

NCSBS comprises millions of proprietorship/partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.

Benefits Of PMMY:

There are three types of products offered in PMMY. These are 'Shishu', 'Kishor' and 'Tarun' to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur and also to provide a reference point for the next phase of graduation/growth to look forward to.

- Shishu: For this product, MUDRA offers loans up to Rs 50,000.

- Kishor: Here, a citizen can avail up to Rs 50,000 to Rs 5,00,000 under PMMY.

- Tarun: The lending limit rises above Rs 5,00,000 to Rs 10,00,000.

MUDRA's delivery channel is conceived to be through the route of refinance primarily to Banks/NBFCs/MFIs.

Also, at the same time, there is a need to develop and expand the delivery channel at the ground level. In this context, there is already in existence, a large number of 'Last Mile Financiers' in the form of companies, trusts, societies, associations and other networks which are providing informal finance to small businesses.

Interest Rate Under PMMY:

As per the government website, MUDRA is a refinancing agency which will extend its funds to Last Mile Financiers to enable them to reach out to the sector. Access to finance in conjunction with rational price is going to be the unique customer value proposition of MUDRA. It will use a variety of innovative financing means including technology to bring down the cost of funding for the ultimate borrower.

Generally, the rate of interest ranges from 8% to 12% as per the Bajaj Finserv website.

Eligibility Criteria For PMMY:

Any Indian Citizen who has a business plan for a non-farm income-generating activity such as manufacturing, processing, trading or service sector whose credit need is up to 10 lakh can approach either a Bank, MFI or NBFC for availing of MUDRA loans under PMMY.

The usual terms and conditions of the lending agency may have to be followed for availing of loans under PMMY. The lending rates are as per the RBI guidelines issued in this regard from time to time.

How To Apply For PMMY?

First and foremost, the PMMY website warns citizens that MUDRA is a refinancing Institution, and it does not lend directly to micro-entrepreneurs/individuals.

Hence, there are no agents or middlemen engaged by MUDRA for availing of Mudra Loans. The borrowers are advised to keep away from persons posing as Agents/ facilitators of MUDRA/PMMY

Method 1:

Accordingly, Mudra loans under Pradhan Mantri Mudra Yojana (PMMY) can be availed of from nearby branch offices of a bank, NBFC, MFIs etc.

Method 2:

Step 1: Borrowers can also now file online applications for MUDRA loans on the Udyamimitra portal (www.udyamimitra.in). You can also apply online through JanSamarth portal(www.Jansamarth.in),

Borrowers will need to fill in the product documents as per their needs such as Shishu, Kishore and Tarun.

In respect to the Shishu category, a one-page application format has been designed which has been posted on the MUDRA website. In respect of the Kishor and Tarun category, a three-page indicative application format has been designed and the same is also posted on the MUDRA website.

You will require documents like identification proofs such as Aadhaar, Voter ID, PAN card, driving license, etc. Also, address proofs such as electricity, telephone bill, gas bill and water bill among others. Lastly, you will also need to represent proof of business such registration certificate of your business.