Mudra loan of Pradhan Mantri Mudra Yojana is designed by government for the financing needs of non-corporate small business units of the country. It has 3-tier loan structure, which depends on the size and stage of the business.


The 3-tiers are as follows—

SHISHU Loan provides financial support of up to INR 50,000. This scheme is allotted for startups.

KISHOR Loan provides financial support between INR 50,000 to INR 500,000. This scheme is allotted for those who have already started up and needs a financial support for establishment.

TARUN Loan provides financial support between INR 500,000 to INR 10, 00,000. This scheme is allotted for those who have already established and needs a financial support for expansion of the business.

Criteria for Applicants and Loaners

All the startups and small business that requires a financial aid from INR 50,000 to INR 10 lakh can apply for this Mudra Loan.

Banks that are willing to offer Mudra loan, must meet some conditions as follows—

  • Have profit records for 3 years straight.
  • NPAs less than 3%.
  • CRAR of at least 9%.
  • Net worth of at least 100Cr.

Banks such as Public Sector, State Co-operative, Micro Finance Institutions, Non-Banking Financial Companies and Regional Rural Banks can participate and provide Mudra Loan.



How to apply for Mudra Loan

The applicant (borrower) must follow the steps below—

First, search for the nearest bank that provides Mudra loan.

Then, visit them directly with your business plan.

Secondly, submit loan application to the bank along with the business plan, identity proof, address proof and passport photographs.

When the documentations and papers are submitted, the will review the plan and the requirements. If the bank is satisfied and approved, the bank will sanction the loan.


Key Features of Mudra

  • Mudra is a refinancing agency and not a direct financial institution.
  • Common Platform for financial institutions such as banks, RRBs, MFIs, NBFCs.
  • Mudra is also associated with a scheme called Pradhan Mantri Mudra Yojana in which all small and micro enterprises can apply for loan.
  • Provide financial supports to onlynon-corporate small business segments such as sole proprietors, partnership firms, manufacturers, machinery business and many more can be considered.
  • Mudra has been mentioned in Budget of financial year 2016.


Eligibility of Mudra Loans

The applicant must satisfy the following rules in order to be eligible for Mudra Loans under PMMY—

Firstly, Must be a Indian citizen and also must be above 18.

Secondly, Should have a detailed Business Plan which may include structure, investment plans, nature of product, marketing and future results as well.

Thirdly, the business should be non-farm earning activity related and Mudra loans only provide financial support of up to INR 10 Lac.

Lastly, some regulations based on RBI guidelines and PMMY rules.

Aims of Mudra

The main objective of Mudra is as follows

  • The main focus of Mudra is for micro sectors of the country. It provides financial assistance to the non-corporate small businesses.
  • The government has a tendency to avoid small business sectors such as food service, artisans, vendors and other micro businesses both in urban and rural areas. So avoid this tendency and to encourage this small sectors government have come with the new idea of Mudra.
  • Mudra establishes a link/connection between the financial institutions with the common peoples, who are in need of loans.


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