Micro Units Development & Refinance Agency (MUDRA) Limited is an institution set up by the Government of India for development and refinancing activities relating to micro units. MUDRA was announced by the Hon’ble Finance Minister in the 2016 Budget. Under MUDRA, loans are provided under three schemes namely ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth and funding needs of the beneficiary micro unit. This loan can be availed by Micro Units and Entrepreneurs in India. The prime aim of the loan is to help the Micro & small enterprises in India, which are the backbone of the Indian industry. The actual name of the project is Pradhan Mantri MUDRA Yojana (PMMY). Mudra loan is extended for a variety of purposes which provides income generation and employment creation in Manufacturing, Services, Retail, and Agri. Allied Activities
What is the purpose of MUDRA?
One of the biggest bottlenecks for SMEs in India is the lack of financial support from the formal banking or financial sector. In many times the lack of formal financing hampers the growth of small businesses and makes them ineffective at competing with larger players. To remove this bottleneck and provide finance to micro units or Entrepreneurs, MUDRA Bank has been set up as a subsidiary of SIDBI. MUDRA would be responsible for refinancing all financiers or financial institutions engaged in the financing of Small Businesses, Societies, Trusts Section 8 Companies, Co-operative Societies, Small Banks, Scheduled Commercial Banks, and Rural Banks which are in the business of lending to micro or small businesses engaged in manufacturing, trading and services activities.
The loan is provided currently under three schemes in Pradhan Mantri MUDRA Yojana. The three schemes are as follows:
- Shishu: Loan of up to Rs.50,000/
- Kishor: Loans of above Rs.50,000 to Rs.5 lakhs.
- Tarun: Loans of above Rs.5 lakhs to Rs.10 lakhs
What are the Eligibility criteria for MUDRA?
Any Indian Citizen who has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading, or service sector and whose credit need is less than 10 lakh can approach either a Bank, MFI, or NBFC for availing of MUDRA loans under Pradhan Mantri Mudra Yojana (PMMY). The terms and conditions of the lender would have to be followed for availing of loans under MUDRA. The lending rates are as per the RBI guidelines issued in this regard from time to time. Since MUDRA is a refinancing institution, loans are not offered directly by MUDRA but through existing NBFCs, Financial Institutions, Banks, Primary Lending Institutions, etc.,
The target audience for MUDRA loans are millions of Proprietorship / Partnership Firms running a small manufacturing unit or service sector units like shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors, and others, in rural and urban areas.
What are the Documents Needed for MUDRA loans?
- MUDRA Loan Application
- Project Report
- Proof of Identity: like PAN / Drivers License / Aadhaar Card / Passport and more.
- Residence proof like recent telephone bill/electricity bill or property tax receipt and more.
- Applicant’s recent photograph less than 6 months old
- Quotation of machinery or other items to be purchased
- Name of supplier or details of machinery or prices of machinery
- Proof of identity/address of the business like tax registration, business license, and more.
- Proof of category like SC/ST/OBC/Minority, if applicable
It is important to note that there is no processing fee or collateral requirement for obtaining a MUDRA loan.