Pradhan Mantri Mudra Loan Interest Rates and EMI Calculator Guide

The Pradhan Mantri Mudra Yojana (PMMY) offers micro-entrepreneurs and small businesses in India the opportunity to grow by providing them with financial support. PMMY interest rates for Mudra loans are competitive, designed to empower the grassroots economy without burdening borrowers.

Overview of Pradhan Mantri Mudra Yojana

The Pradhan Mantri Mudra Yojana (PPMY) was launched on April 8, 2015, by Prime Minister Narendra Modi. This yojana aims to facilitate easier access to credit for smaller businesses and entrepreneurs across India. The initiative is designed to provide loans up to ₹20 lakh to support various types of enterprises, empowering them to grow and thrive.

Mudra loans are offered through a diverse range of financial institutions. It includes commercial banks, regional rural banks (RRBs), small finance banks, cooperative banks, and microfinance institutions (MFIs). These loans come without a predetermined interest rate, but the general rate tends to be around 12%. Plus, borrowers benefit from a repayment period of up to five years. This gives them ample time to manage their finances effectively.

Notably, Finance Minister Nirmala Sitharaman highlighted in her 2024 Budget speech that the scheme has significantly contributed to women’s entrepreneurship. Around 30 crores of Mudra loans were disbursed to women entrepreneurship over the last decade. This has promoted empowerment and dignity in the workforce.

Changes in Pradhan Mantri Mudra Yojana After 2024 Budget

In the 2024 Budget presented on July 23, Finance Minister Nirmala Sitharaman announced a significant enhancement to the Pradhan Mantri Mudra Yojana. The upper limit for Mudra loans is set to double, increasing from ₹10 lakhs to ₹20 lakhs for entrepreneurs who have successfully availed and repaid previous loans under the “Tarun” Mudra category. This change reflects the government’s commitment to supporting businesses that demonstrate a track record of responsible borrowing and repayment. This ultimately aims to boost entrepreneurial activity across the nation. Mudra Loan Features and Highlights

Loan Categories: Shishu, Kishor, and Tarun, catering to businesses at different stages of growth.
Maximum Loan Amount: Up to Rs. 10 Lakhs.
Interest Rate of Mudra Loan: Vary by loan category, generally from 1% to 12% p.a. for Shishu; 8.60% to 11.15% p.a. for Kishor; and 11.15% to 20% p.a. for Tarun.
Repayment Tenure: Up to 5 years for Shishu and up to 7 years for Kishor and Tarun.
No Collateral Required: Loans are unsecured, requiring no collateral.

Pradhan Mantri Mudra Yojana Loan Interest Rates and Limits

Shishu: Loans up to Rs. 50,000 with interest rates starting from 1% p.a.
Kishor: Loans from Rs. 50,000 up to Rs. 5 Lakhs with interest rates ranging from 8.60% to 11.15% p.a.
Tarun: Loans from Rs. 5 Lakhs to Rs. 10 Lakhs with interest rates between 11.15% and 20% p.a.

Factors Affecting Mudra Loan Interest Rates

Borrower’s Creditworthiness: Includes credit score and repayment history so that one can also find out the Mudra Yojana interest rate.
Business Viability: Profitability and stability of the business.
Loan Amount and Tenure: Larger loans and longer tenures can affect the rate.
Lender Policies: Specific criteria set by the lending institution.

Documents Required to Apply for Mudra Loan

Applying for a Mudra loan requires a set of documents including proof of identity (Aadhaar, PAN), address proof, business proof (registration, licenses), and financial statements (bank statements, income tax returns). These documents help in assessing the applicant’s eligibility, ensuring a smooth and transparent loan processing experience. For more information visit Lendingkart Mudra Loan document requirements.

Mudra Loan Eligibility

Eligibility for a Mudra loan includes being an Indian citizen with a business plan for a non-farm sector income-generating activity. The applicant’s business must be in its early stage or looking for expansion. The PMMY scheme interest rates are competitive and the scheme targets a wide range of entrepreneurs, including women, with a focus on inclusive growth. For more information visit Lendingkart Mudra Loan eligibility.

Age Requirement: The applicant should be at least 18 years old/
Valid Identification: A valid ID proof is necessary to establish the applicant’s identity.

The following groups are eligible to apply for Mudra loans:

Small Business: IIndividualsrunning small enterprises.
Artisans: Craftspeople engaged in various trades.
Shopkeepers: Retailers and local vendors.
Agricultural Workers: Those involved in farming and related activities.
Commercial Vehicle Purchases: Applicants looking to buy vehicles like tempos, trucks, or autos.
Food Processing Sector: Individuals in manufacturing, packaging, and distribution within the food industry.
Service Providers: Professionals such as doctors, lawyers, and other service-oriented businesses.
Other Income-Generating Sectors: This includes repair shops, beauty parlours and similar ventures.

Advantages of Pradhan Mantru Mudra Yojana

The Pradhan Mantri Mudra Yojana (PMMY) is a significant initiative that supports aspiring entrepreneurs across India. It offers numerous benefits designed to make starting and running a business more manageable. Here are some key advantages of this scheme:

Collateral-Free Loans: One of the most appealing aspects of the PMMY is that it usually offers collateral-free loans. Borrowers do not need to put up any assets as security. This makes it easier for small business owners to access funds without the fear of losing their property.
Financial Inclusion: The PMMY plays a vital role in promoting financial inclusion. It provides access to credit for small business owners and entrepreneurs who might struggle to secure loans from traditional banks. By bringing these individuals into the formal banking system, the finance scheme aims to empower them financially and help them grow their businesses.
Versatile Loan Usage: The funds obtained through PMMY can be used for various purposes. This includes:
Working Capital Loan: Money can be used to cover day-to-day operational costs, such as salaries and supplies.
Business Expansion: Entrepreneurs can use the loans to grow their businesses, whether that means increasing their product lines or expanding to new locations.
Purchasing Machinery: Loans can also be used to buy equipment or machinery needed for production, which can enhance efficiency.
Renovation: Funds can be allocated for renovating or upgrading business premises to improve customer experience and attract more clients.
Skill Development: This initiative goes beyond just providing loans; it encourages skill development among entrepreneurs. Various training programs are offered, helping individuals enhance their skills and build their capabilities in managing and running a business effectively.
Low Interest Rates: The Mudra interest rates are competitive and designed to support borrowers in managing their finances. Importantly, interest is only charged on the amount actually used from the loan, rather than the full amount sanctioned. This approach helps reduce overall costs for borrowers.
Wide Availability: Loans under this scheme can be obtained from various types of banks, including public sector banks, private banks, regional rural banks, and cooperative banks. This wide network makes it easier for entrepreneurs to find a bank that suits their needs.
Supports Employment Generation: By facilitating the growth of small businesses, the PMMY indirectly contributes to job creation. As businesses expand, they often hire more employees, which in turn supports local economies and communities.
Boosts Entrepreneurship: The PMMY actively encourages entrepreneurship, enabling the establishment of micro-enterprises. This fosters innovation and economic empowerment, as individuals can turn their ideas into reality and contribute to the economy.
Flexible Repayment Period: The loans are categorised into three types: Shishu Mudra loan, Tarun Mudra loan, and Tarun Mudra loan. All these types are catered to different business growth. This flexibility allows borrowers to choose repayment terms that suit their financial situations. The repayment period can range from 12 months to 5 years, with an option to extend for an additional 5 years if needed.
Support for Women Entrepreneurs: The PMMY includes the Mahila Udyam Scheme which specifically aims at empowering women entrepreneurs. This initiative encourages and supports women to start their own businesses, contributing to gender equality in entrepreneurship.

How Much Mudra Loan Can You Get?

The amount of money that you get from a MUDRA loan depends on many factors, including how much money you qualify for and your business’ profit.

Generally speaking, the larger your business and the more profit it makes, the less loan you will get per unit of money.

The maximum that you can receive per month is Rs. 1 lakh, and the minimum is Rs. 5 lakhs, although some banks offer small business loan in the region of Rs. 10-20 lakhs, while others offer up to fifty times this amount from their MUDRA scheme.

What are Mudra Cards?

Mudra cards are an integral part of the Pradhan Mantri Mudra Yojana. It serves as a debit card issued to borrowers. These cards come with several key features:

ATM Withdrawals: Borrowers can easily withdraw funds from ATMs nationwide, providing convenient access to their loan amount.
Loan Limit: The bank establishes a loan limit under the borrower’s name. This allows them to withdraw funds up to the approved amount.
Working Capital: Mudra cards are particularly useful for addressing the working capital needs of businesses. It enables quick access to funds as required.
Digital Transactions: All transactions conducted using Mudra cards are entirely digital. They promote a cashless economy.

Versatile Payments: These cards can also be used for making payments at Point of Sale (PoS) terminals, facilitating smooth business transactions.

How To Apply For Mudra Loan?

Online Application: Visit the official Mudra website for online registration and submit the required details and documents.

Offline Application: Approach participating banks, NBFCs, or Micro Finance Institutions (MFIs) with the necessary documentation to apply in person.

Follow these straightforward steps to apply:

Obtain the Application Form: Visit the relevant bank’s branch and request the Pradhan Mantri Mudra Yojana application. This form is essential for initiating your loan application. To get the form online, you need to follow these steps:
Visit the official website: Start by going to the official website of the Pradhan Mantri Mudra Yojana. This site contains all the information and resources you need about the scheme.
Locate the login link: On the homepage, look for the “Loguin for PMMY Portal” link. This is typically found prominently on the site, making it easy to access.
Enter your credentials: After clicking the link you will be prompted to enter your login details, such as your username and password. Make sure you have these details ready to log in successfully.
Fill Out the Form: Carefully fill out the application form with all required information, including your name, address, mobile number, and Aadhar card number. It is crucial to provide accurate information to avoid any delays.
Submit the Application: Once you have filled out the form, submit it along with any required documents to the bank officer. The bank may ask for identification and other paperwork to verify your eligibility.
Loan Verification: The bank officer will review your loan application and documents. If everything is in order, your loan will be processed.
Funds Disbursement: Upon approval, the loan amount will be credited to your bank account, usually within a month. This timely disbursement helps you get started on your business plans without unnecessary delays.

The Mudra loan initiative is a cornerstone for promoting small businesses in India, offering financial aid at lenient terms to boost entrepreneurship and employment across the country.

Conclusion

The Pradhan Mantri Mudra Yojana serves as a crucial stepping stone for aspiring entrepreneurs in India. With its focus on financial inclusion, skill development, and accessible loans, it empowers individuals to turn their business ideas into reality. The scheme supports the establishment of new businesses as well as promotes job creation and economic growth at the grassroots level. By removing barriers such as collateral requirements and providing flexible repayment options, PMMY makes it easier for small businesses to thrive. As organisations like Lendingkart continue to offer additional support and financial solutions, entrepreneurs can further enhance their chances of success. This drives innovation and economic empowerment throughout the country.

Frequently Asked Questions:

1. Why do you think the MUDRA scheme is being implemented in such a big way?

The main reason is that the government is trying to break down barriers to entrepreneurship in India. It wants to make it easier for people to start their own business, and the MUDRA loans are the perfect way of doing this.

2. Does the MUDRA scheme have any limits on the amount of loans you can get?

No, there are no limits for how much money you can get from a MUDRA loan.

3. What are the requirements for getting the loan?

You will have to be an Indian citizen who is below 35 years of age, and your business must have been in place for at least three years.

4. Who can get a loan from the MUDRA scheme?

All of these loans are open to anyone regardless of their religion or caste. They are available to people from urban and rural areas alike.

5. Are there any other benefits for people who get a MUDRA loan?

Yes, there is. For example, they do not have to make any instalments or any other payments when they repay the money. They can also start their business with a minimal amount of capital, and if they turn it around, they can be able to repay the loan back in one lump amount instead of paying it back in instalments over time.

6. What is the minimum loan in Mudra?

The minimum loan amount available in the Mudra Yojana’s overdraft facility varies depending on the bank and its policies. Interest rates for the overdraft facility can also differ between banks. This facility is typically extended to micro and small enterprises, providing them with flexibility and liquidity whenever needed. It can be a beneficial financial tool when used wisely, wherever possible.

7. What is the time period of Mudra Loan?

The Mudra Loan’s time period varies depending on the specific bank and borrower’s needs. It primarily offers an overdraft facility, which means borrowers can access funds as needed, making it a flexible financing option. Interest rates for the overdraft facility may vary, so it’s advisable to check with your bank for specific details. Overdraft facilities are generally beneficial for small business owners and entrepreneurs, offering liquidity wherever possible.

8. Are the interest rates for Mudra Loans fixed or variable?

The interest rates for Mudra Loans with overdraft facilities can vary depending on the lending institution. The overdraft facility allows borrowers to withdraw more money than their account balance, up to a specified limit. Interest rates on overdraft facilities may be fixed or variable, depending on the bank’s policies. It’s advisable to check with the respective bank or financial institution for specific details on the interest rate structure for Mudra Loans with overdraft facilities.