What is Mudra?

Mudra refers to the Micro Units Development and Refinance Agency Limited. It is formed to provide up to Rs. 10 lakhs maximum i.e. refinancing institution loans to the eligible enterprises through the following banks-

• Commercial Banks,
• RRBS,
• Cooperative Banks,
• NBFC and
• MFI etc.

The borrowers of the Mudra Loan can easily approach the nearby branches of the lending institutions to apply for the loans or through the online process under the MUDRA scheme.

 

What is Mudra Yojana Scheme?

The Government of India has launched a flagship scheme named as the Prime Minister Mudra Yojana or PMMY dated April 8, 2015. Its aim is to extend affordable loans to the non-corporate and non-farm micro and small enterprises or MSEs for supporting their funding needs. The thrust on the Micro Finance can strike out an economic development tool that meets the objective to get the provision of loans, financial literacy, generation of employment, and provide social support to the lowest strata with ample opportunities to sustain life.

 

Key benefits of the Mudra Yojana Scheme

 

• The Micro and Small enterprises or MSE are associated with the income generation which is the prime target for the extension of loan facilities.
• It is not mandatory for the borrowers to provide any kind of collateral or security to avail the Mudra Loan.
• There are no charges for processing to avail of the loan.
• The loans are usually provided to the funded and non-funded category that induces an element of flexibility for the usage of funds.
• The loans can be in the form of term loans or overdraft facilities or letters of credit or bank guarantees. These help in catering to a wide array of requirements.
• This scheme does not prescribe any minimum amount.

 

Mudra loan in detail

There are three categories under the MUDRA loans which are based on the set parameters for making the business more viable.

Sishu

Category: Rs 50000

Basic Norms:

• Providing finance for machinery essential details- valid quotation and supplier’s details

Kishor

Category: Rs 50001 to 5 lakhs

Basic Norms:

• Existing bank sheet (the previous two years)
• Statement of bank account details
• Income returns
• Sales return
• Estimated balance sheet (current year)
• Technical and economical validity

 

Tarun

Category: Rs 50001 to 10 lakhs

Basic Norms:

• Same requirements as Kishor Mudra Loan
• Proof of identity and address
• Caste certificate in case categorized under reserved category

Features

• Three types of Mudra loan
• No minimum amount for a loan
• The maximum amount is Rs 10 lakhs
• No security or collateral for a loan
• No processing fee
• Loan facilities are extended to non-corporate and non- farm enterprises.

Eligibility for the Mudra loan

The enterprises and the entities falling under the following categories eligible for the Mudra Loan are-

· All the non-corporate and non-farm enterprises.

· Primarily associated with the income generation through three aspects. They are- manufacturing, trading, and rendering services

· The requirement of the credit is maximum Rs.10 lakhs or lower than that.

· Associated with the allied agriculture services since April 1, 2016.

 

The interest rate under the Mudra loan

RBI has defined the interest rate applied on MUDRA loans i.e. MCLR or the Marginal Cost of Lending Rate with the following :

Loans up to Rs.50000:

· For the Micro Enterprises: MCLR + SP

· For the Small Enterprises: (MCLR + SP) + Bank Load

Loans above Rs.50000 up to Rs.2 lakhs:

· For the Micro Enterprises: (MCLR + SP) + Bank Load

· For the Small Enterprises: (MCLR + SP) + Bank Load

Loans above Rs.2 lakhs up to Rs.10 lakhs:

· For the Micro Enterprises: (MCLR + SP) + Bank Load

· For the Small Enterprises: (MCLR + SP) + Bank Load