A Quick Guide to Mudra Loans
By TOI Staff December 16, 2022 Update on : January 9, 2023
In 2015, the Pradhan Mantri Yojana was launched. The scheme was meant to help small businesses financially so that they could grow and expand. Mudra Loan is given under the same scheme.
MUDRA expands to mean Micro Units Development and Refinance Agency. It’s a loan that any sector business, profit or non-profit can avail of. The range for the loan is between INR 50,000 to INR 10 Lakhs. An exciting thing about MUDRA Loan Interest Rate is that it depends on the profile of the loan seeker. MUDRA loans can be beneficial to small businesses trying to gain a footing in the business world. A range of companies or start-ups can avail of loans under the Mudra scheme. The scheme was created to help people have working capital to run businesses and promote entrepreneurship in India. Providing business loans for small companies aims to help them with equipment.
Read more details about the loan and why you must consider it.
– Institutions offering: Any public sector banks, private sector banks, microfinance institutions or regional rural banks can offer mudra loans.
– Industry: Mudra loans can be availed by businesspersons from various industries. It could also be a regular business vendor or a shopkeeper. Beyond that, the agriculture, handicrafts, service, and food production sectors can apply for loans.
– Types of companies: There are a few specific types of companies that can apply for the loan. They are companies such as microfinance institutions, small finance banks, NBFCs and other commercial banking companies.
– Categories: The Mudra loan scheme is divided into three categories based on the amount they can avail. They are called Shishu, Kishor and Tarun. Shishu refers to applications that can benefit loans up to INR 50,000. Kishore would be between INR 50,000 and INR 5 Lakhs. At the same time, Tarun would be between INR 5 Lakhs and 10 Lakhs.
– Eligibility: One of the most important aspects of applying for loans is checking the eligibility criteria to apply for it. At the outset, any applicant for the mudra loan needs to be an Indian citizen and have a business plan in the sectors specified in the scheme details.
The applicant needs to be a minimum of 18 years of age and a maximum of 65 years. A new or an already established business unit can avail of the loan. It requires proof of identity, residence, photographs, and an application form to be submitted.
– Collateral: One of the best aspects of the mudra scheme is that it doesn’t require any collateral. It also doesn’t ask for any third-party guarantee or security as such. This is one of the main reasons why it’s such a boon for small businesses or persons who want to start businesses anew.
Once you apply for a mudra loan, you get a debit card to utilise the loan amount. The Mudra loan scheme benefits micro and small businesses in India and helps improve entrepreneurship in India. It has made it easier for people to get MSME loan in India. If it weren’t for the mudra scheme, MSME businesses would not be able to get easy loan approvals.