The Micro Units Development and Refinance Agency Limited has been set up by the Indian government for the development and refinancing of various micro units. Under this scheme, the loan is classified into three stages namely, Shishu, Kishor, and Tarun to symbolize the funding requirements of the micro units. The small business units in India often fail to grow due to lack of adequate financial organizations and Mudra is devoted to offer loan to the small business units, Trusts Section 8 companies, the schedules rural and the commercial banks, and the co-operative societies.
The inadequate finances, which until now obstructed the growth of small businesses and did not allow them to compete with the larger business entities can now be eliminated with the availability of mudra loans. The Mudra Bank has been set up as a subsidiary of SIDBI.
Eligibility for Mudra Loan
Any Indian citizen who is involved in a business that is not related to the farming sector and generates income related to processing, manufacturing, service, or the trading sector, and who have credit less than ten lakhs can approach a NBFC, bank, or MFI for availing the Mudra Bank loan that is offered under the Pradhan Mantri Mudra Yojana or the PMMY. The borrowers have to follow the terms and conditions stated by the lender for availing the loan amount and the rates of interest are issues periodically by the RBI. Mudra is a refinancing organization that does not offer the loan directly but through the financial institutions, banks, the primary lending institutions, and the NBFC’s.
There are millions of partnership and sole proprietorship firms that operate small service or manufacturing unit such as the fruit and vegetable vendors, truck operators, shopkeepers, repair shops, small industries, machine operators, food processors, and the artisans who can apply for this loan in the rural and the urban areas.
Documents required for the loan
The following are the documents required for the loan available under the Pradhan Mantri Mudra Yojana.
- Mudra Loan application form
- Two passport-size color photographs
- Address and photo identity proof
- Income proof
- Bank statement for the last six months
- Residence proof such as the electricity and the telephone bill
- Quotations of the items or machinery to be purchased
- Details and prices of the machinery and the name of the supplier
- Address of the business through business license or the tax registration documents.
- Proof of category such as SC/ST/ Minority/OBC if applicable.
- For the micro, medium, and the small scale of business the Udyog Aadhaar registration allows you to apply for the Mudra loan effortlessly.
There is no processing fee or requirement of collateral for Mudra loan.
Loan from the PMMY
Mudra has created several financial products under the Pradhan Mantri Mudra Yojana and the products have been classified into several categories according to the development or the phase of growth of the entrepreneur or the micro beneficiary unit.
- Shishu – Offers a loan amount up to Rs 50,000/-
- Kishor– Covers a loan amount beyond Rs 50,000 up to five lakhs.
- Tarun – covers a loan amount beyond five lakhs up to ten lakhs
Under the scheme, more focus is given to the first two categories of borrowers and to fulfill requirements of the different sectors of businesses and entrepreneurs, the loan amount or the financial products have been designed accordingly.
Furthermore, there are four categories of funding support under the Mudra Yojana.
Micro Credit Scheme for loan amounts up to one lakh to be obtained through the MFI’s
These loans are usually offered through the Micro Finance Institutions for the individuals that generate income under the micro enterprise activity.
Refinance scheme for the Regional Rural Banks or the RRB’s, the Commercial Banks and the scheduled Co-operative Banks
Under this scheme, the banks can obtain the support of refinancing from Mudra to offer assistance to the micro enterprise activities. The support of funding is available for working capital or term loans up to an amount of ten lakhs per unit.
Women Enterprise Program
This loan is for the women entrepreneurs in which the financing banks and the MFI’s offer reduction in the interest of the loan.
- Securing the loan portfolio
Mudra also supports the banks, MFI’s and the NBFC’s to raise money for funding the micro enterprises by participating in the process of securing the loan assets.
Availing the loan
The borrowers can check the list of the top private, public sector banks, and the rural banks and approach them with the necessary documents to avail the loan. They can also apply online by visiting the official website of Mudra ad any one of the seventy banks that are listed under the scheme.
About the author:
Anil Baswal is a Legal Content Writer at myudyogaadhar.com which provides legal services to small startups & business across India through simplified platform with over 10k+ clients. Anil has 3 year + experience in the legal domain related to company incorporation & tax matters etc.