Mudra Loan – Complete Overview
The Mudra Loan, launched under the Pradhan Mantri Mudra Yojana (PMMY), is designed to support micro and small entrepreneurs across India. The goal is to help people start or expand small businesses by giving them access to collateral-free loans.
Types of Mudra Loans
Mudra loans are divided into three categories to suit businesses at different stages:
- Shishu – For those starting a new venture, with loans up to ₹50,000.
- Kishore – For growing businesses, offering loans between ₹50,001 and ₹5 lakh.
- Tarun – For established small businesses, with loans ranging from ₹5 lakh to ₹10 lakh.
Who Can Apply
Any Indian citizen involved in or planning a small-scale business activity can apply. This includes:
- Shop owners
- Small manufacturers
- Street vendors and food stalls
- Artisans and weavers
- Service providers (e.g., salons, repair shops)
- Drivers looking to buy commercial vehicles
- Entrepreneurs in trading, services, or small production
The applicant can be an individual, a partnership firm, a company, or part of a self-help group.
What the Loan Can Be Used For
Mudra loans are versatile and can be used for various purposes like:
- Buying tools or machinery
- Expanding shop space or renovating business premises
- Purchasing inventory or raw materials
- Working capital requirements
- Business-related vehicle purchase
Key Features
- No collateral required – Unsecured loan
- Affordable interest rates – Usually starts around 8% (varies by lender and borrower profile)
- Flexible repayment – Tenure up to 5 years depending on the business and bank terms
- No processing fees – Generally for Shishu and Kishore category loans
Required Documents
To apply for a Mudra loan, you need:
- Identity proof: Aadhaar card, PAN card
- Address proof: Voter ID, utility bills, or Aadhaar
- Recent passport-size photographs
- Business plan or project report
- Bank account statement (last 6 months)
- Caste certificate (for SC/ST/OBC applicants if claiming benefit)
List of Banks That Provide Mudra Loans
Public Sector Banks:
- State Bank of India (SBI)
- Punjab National Bank
- Bank of Baroda
- Canara Bank
- Union Bank of India
- Indian Bank
- Bank of India
- UCO Bank
- Central Bank of India
- Bank of Maharashtra
Private Sector Banks:
- HDFC Bank
- ICICI Bank
- Axis Bank
- Kotak Mahindra Bank
- IndusInd Bank
- Yes Bank
- IDFC First Bank
- Federal Bank
Regional Rural Banks (RRBs):
- Bihar Gramin Bank
- Baroda UP Bank
- Karnataka Vikas Grameena Bank
- Madhya Bihar Gramin Bank
- Andhra Pragathi Grameena Bank
Small Finance Banks and NBFCs:
- Ujjivan Small Finance Bank
- Equitas Small Finance Bank
- AU Small Finance Bank
- Bajaj Finserv
- Lendingkart Finance
- Capital Float
How to Apply – Mudra Loan Application Process
- Visit the Bank: Go to your nearest bank branch that provides Mudra loans. You can choose any bank from the above list.
- Collect the Application Form: Ask for the Mudra loan form and fill it with your business details.
- Attach Documents: Submit identity and address proof, business plan, quotations for machinery or goods, bank statement, and photographs.
- Bank Verification: The bank will review your documents and may ask for further clarification or a business visit.
- Loan Approval & Disbursement: Once approved, the loan amount is credited to your business account.
Mudra Loans are a great opportunity for small business owners and aspiring entrepreneurs to get formal credit without the burden of pledging any assets. If you want help in preparing your business plan or choosing the right loan category, I can assist you with that too.