Pradhan Mantri MUDRA Loan Yojana: Step by Step Guide to Avail the Scheme

Small and micro industries in India find it difficult to compete with larger industrial players. This is largely due to the lack of financial support from the formal banking sector. In April 2015, the government of India launched a scheme called the Pradhan Mantri MUDRA Loan Yojana, specifically for financing small and micro industries in India. The Micro Units Development and Refinance Agency (MUDRA) has been set up as a subsidiary of the Small Industries Development Bank of India (SIDBI).

Some of the facilities offered by the Pradhan Mantri MUDRA Yojana Scheme are:

-Loan will be available to beneficiaries who are eligible for MUDRA loans
-The amount of loan will be between Rs.50,000 and Rs.10 lakhs, depending on the stage of growth of the unit and the capital requirement
-Once the loan is disbursed, a personalised card is issued in the name of the firm
-The MUDRA card is linked to the savings account under the Pradhan Mantri Jan Dhan Yojana
-The card can be used to withdraw money from the ATM of the bank. The maximum withdrawal limit is Rs.25,000 per day
-An insurance cover of Rs.1 lakh is provided on each card

The loans under the MUDRA scheme are collateral-free. However, the borrower needs to pay interest on the loan amount. The interest rate varies from 10–16% depending upon the loan category. Before you apply for the loan, you need to be familiar with the eligibility criteria for MUDRA loans.

-The purpose of the loan should be to generate income. The scheme extends loans strictly for business purposes
-Only non-farming business units fall within the purview of MUDRA loans
-The business units applying for MUDRA loans should be registered as MSME. Large scale industries are not eligible for MUDRA loans
-The maximum loan that an enterprise can avail under the MUDRA scheme is Rs.10 lakh. The business plan that you present for availing the loan needs to fall within this limit

How to apply for a MUDRA loan?

The MUDRA loans are given out by lenders that have been enrolled as partners by the agency. Hence the loan application process has to adhere to RBI guidelines. The following documents and information need to be furnished by the applicant in order to avail the loan:

-A proper business plan needs to be submitted to the agency at the time of application.
-A loan application must be submitted under the selected category: Shishu, Kishore or Tarun

  • Shishu: Loans up to Rs.50,000/-
  • Kishore: Loans above Rs.50,000, and up to Rs.5 lakh
  • Tarun: Loans above Rs.5 lakh, and up to Rs.10 lakh

-The applicant needs to submit a proof of identity, proof of address and 2 passport size photographs
-No processing fee or collateral is applicable while availing a loan under the MUDRA scheme
-You need to produce quotations of machinery or other items that you propose to purchase with the loan amount
-In case you wish to claim benefits under the SC/ST/OBC or Minority category, documents supporting your claim need to be submitted

In case, of a shortfall from the Pradhan Mantri MUDRA Loan Yojana, you can avail finance with customised business loans from Bajaj Finserv. These loans offer a high loan amount up to Rs.30 lakh at an attractive interest rate and offer many more benefits to small businesses.

Additionally, avail pre-approved offers on business loans and a range of financial offerings as further incentive. Share a few basic details to know your pre-approved offers.

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