Banks and financial institutions have sanctioned about Rs 15.10 lakh crore to 28.81 crore beneficiaries under the Mudra scheme in the last six years, the Department of Financial Services under the Finance Ministry said in a tweet on Wednesday, May 26, 2021.
To promote entrepreneurship, Prime Minister Narendra Modi launched Pradhan Mantri MUDRA Yojana (PMMY) on April 8, 2015. Under the Mudra scheme collateral or security-free loans up to Rs 10 lakh in three categories – namely Shishu, Kishore and Tarun for income-generating activities in manufacturing, trading and services sectors and activities allied to agriculture are provided.
The interest rates under MUDRA loans vary from bank to bank depending on the category of loans and business requirements. Last year, the government decided to give a 2 per cent interest subvention to borrowers under the ‘Shishu’ category, as part of the stimulus package or Atmanirbhar Bharat Abhiyan Package announced in May to help small businesses tide over difficulties created by the lockdown following the outbreak of Covid-19.
What is Mudra loan?
Micro Units Development and Refinance Agency (MUDRA) Loan scheme under Pradhan Mantri Mudra Yojana is an initiative by the Government of India that offers loans to MSMEs, SMEs and individuals. Under MUDRA Yojana three loan schemes are offered, Shishu, Kishor, and Tarun. These are security or collateral-free loans provided by banks and NBFCs with a repayment tenure from 12 months to 5 years with flexible EMIs.
Products offered under Mudra Loan
Shishu Loan: Loans up to Rs. 50,000 can be availed in the Mudra Shishu Loan scheme for startups and new businesses.
Kishor Loan: Loans from Rs. 50,001 to Rs. 5,00,000 are available in Kishor Loan Scheme for buying equipment/machinery, raw materials, business expansion for existing enterprises.
Tarun Loan: Loans from Rs. 500,001 to Rs. 10,00,000 are available under Tarun Loan Scheme for established businesses and enterprises.
Purpose of Mudra scheme under PMMY
The main purpose of the Mudra loan is to finance small and micro-businesses so that they can contribute to the Indian economy.
Here is a list of businesses that are covered under the Mudra scheme to perform income generating activities-
– Commercial Vehicle: In this category, Mudra finances for equipment and machinery can be used to purchase commercial transport vehicles like taxis, tractors, trollies, goods transport vehicles, auto-rickshaws, e-rickshaws etc.
– Service Sector Activities: This category includes businesses of salons, medical shops, tailoring shops, gyms, repair shops, dry cleaning and photocopying shops, etc.
– Food and Textile Product Sector Activities: With such a large population there is a correspondingly large potential for food products and food processing businesses. The scope of the sector is incredibly wide and includes Small food stalls, Pickle makers, Papad makers, Biscuit makers, Canteen services, Cold storages etc.
– Business activities for Traders and Shopkeepers: Under this category, a loan of up to Rs 10 lakh may be availed of for the running of a shop, trading business, service business and non-farm income generating activities.
– Equipment Finance Scheme for Micro Units: Under the PMMY scheme micro-enterprises may apply for financial support towards purchasing machinery that will be used to run their business. The maximum amount for such loans is Rs 10 Lakhs.
– Agri-allied Activities: Activities that are included in this category, businesses in agri-clinics and agribusiness centres, food & agro-processing units, poultry farming, beekeeping, pisciculture, sorting, livestock-rearing, grading, aggregation agro industries, diary, fishery, etc.
Features of Mudra loan
– In the Mudra loan scheme businesses don’t need to offer collateral or security to avail of the Mudra loan
– Entrepreneurs’ age should be 18 or above and below the age of 65 to avail of the Mudra loan
– Entrepreneurs can avail up to Rs 10 lakh
– The Mudra loan amount has to be repaid within 5 years
– All Mudra loans can be availed online via the Mudra app, ‘Mudra Mitra’ and through Mudra cards
How to Apply for Mudra Loans?
The application form is available at mudra.org.in. Entrepreneurs can download the form and fill in all the required details. Different banks may have slightly different application procedures. Entrepreneurs must visit the nearest branch of the desired bank from where they want to take the Mudra loan and submit the filled downloaded form and complete the bank formalities.
Benefits of Mudra Loan
-Mudra loans are mainly offered to traders, vendors, shopkeepers and MSMEs engaged in trading, manufacturing and service sector activities
-Mudra scheme is comprised under Credit Guarantee Schemes from the Government of India
-The availed loan amount can also be accepted as overdraft facilities and term loans
– All Non-farm enterprises, such as small or micro firms engaged in the income generating activities can avail of Mudra loan
– Mudra scheme can be availed via Mudra cards
-People belonging to SC/ST category can also be availed of Mudra loans at concessional interest rates