Government of India has taken the initiative of MUDRA Yojana to uplift the small and medium business enterprises of the country by leveraging their business operations. It was started in the year 2015 and has been remarkably active in disbursing loans throughout India. The acronym MUDRA stands for Micro Units Development and Refinance Agency Ltd.
The scheme aims at funding the unfunded. MSMEs of the country have been grossly underfunded since independence. This was mainly due to the lack of sufficient data on these businesses. To bridge this funding gap, the Government has introduced this scheme that provides collateral-free loans up to Rs. 10 Lakh. The initiative has reportedly disbursed funds of value Rs. 49,000 Crore divided among 5 Crore loans in the year FY 2018-19.
The process of getting funds under this scheme has been kept simple and hassle-free. However, there are a few eligibility criteria that have to be met to avail a loan under PM Mudra Yojana.
Note that the Government of India does not provide funds directly to any individuals under this scheme. It has vested the power of disbursing funds to the numerous financial institutions and non-banking financial companies (NBFCs) of the country.
Eligibility for the scheme:
The Pradhan Mantri Mudra Yojana details regarding eligibility criteria are listed below:
- This loan can be availed by small and micro industries and manufacturing concerns of the country.
- Small shopkeepers and vendors can avail unsecured loans under this scheme.
- Farming and purely agricultural concerns are not allowed to raise funds under this scheme.
- Allied agricultural activities are eligible to raise funds from this scheme.
- Horticulture and fisheries are business organizations that can avail finance under Mudra Yojana.
Those entities not eligible for this scheme can avail feature-rich Business Loans from NBFCs like Bajaj Finserv.
They also bring you pre-approved offers that make availing loans quick and easy. Pre-approved offers are available on all major financial products including secured credits like home loans, unsecured credits like business loans and personal loans, etc. You can take a look at your pre-approved offer by providing your name and phone number.
Before learning the steps for applying under this scheme, you should know about some of its features.
- It provides finance under three categories. They are :
- Shishu: Loans up to Rs. 50000 are forwarded under this category at 10% to 12% interest rates.
- Kishore: Under this category, loans above Rs, 50000 are forwarded up to the limit of Rs. 5 Lakh at 14% to 17% interest rates.
- Tarun: This category caters to loan requirements of Rs 5 Lakh and above up to Rs. 10 Lakh.
The highest loan that this scheme can provide is up to Rs. 10 Lakh.
- The loans are generally forwarded on MCLR basis. It refers to the Marginal Cost of Funds based Lending Rate (MCLR) which is set as per RBI guidelines.
- Loans availed under Mudra Yojana are generally free from any processing charges.
- These loans are provided without any security. That is, there is no collateral required to avail them. However, learning about the criteria for a business loan approval will increase your chances of availing the loan under PMMY.
How to apply?
Listed below are the steps to apply for a loan under PMMY:
Download the application form for Pradhan Mantri Mudra Yojana available through the official website.
Approach the lender of your choice along with the filled out form. You must have the following documents to get your application approved.
- Identity proof
- Proof of residence
- Proof of business
- Income proof
- Minority quota certificate (if any)
- Two recent passport size photographs of the applicant
Submit the application form to the lender along with the required documents. Wait for the lender to approve your application after completing the required formalities and paper-work. Once approved, you will be issued a Mudra Debit Card which you can use to withdraw funds from ATMs near you. The maximum withdrawable funds in a day are Rs. 25000. These loans charge lower interest rates which help in cutting your cost without affecting the growth of your business.
Follow these steps to get your loan under PMMY approved. However, you must do thorough research on what is Mudra Yojana before availing it.
Additional Read: Financing solution for msmes