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The Modi government has launched several programs and initiatives to create an "Atmanirbhar Bharat." One of the most well-known campaigns to support the expansion of domestic businesses is Make in India. The Pradhan Mantri MUDRA Yojana was created as a result. This program, which was introduced in 2015, has achieved tremendous success. The PMMY scheme has granted loans of 15.52 lakh crore (INR) to more than 29.55 crore borrowers in the six years since its formation. The program offers all societal groups an equal playing field. Here, we discuss the MUDRA Loan program and its components.

What is a Mudra loan?

Mudra Loan is a government-initiated credit funding program that provides working capital loans, business loans, loans to MSME and MSMEs, overdraft facilities up to Rs. 10 lacks, and loans to people, company owners, and independent contractors. Banks and NBFCs are not required to request any collateral or security from the borrowers under this plan. The provided payback period is up to five years, with minimal administrative and foreclosure costs.

Women entrepreneurs can apply for and obtain Micro Units Development and Refinance Agency (MUDRA) Loans via the Pradhan Mantri Mudra Yojana (PMMY) at reduced interest rates (from specified Banks/NBFCs). Under the Mudra Yojana, lenders may issue business and MSME loans without collateral, up to Rs. 10 lacks. These loans fall into three categories: Shishu, Kishor, or Tarun.

Feature of Mudra Loan

Nature of Loan

Term loans, working capital loans, and overdraft facilities are the three types of loans.

Types of Schemes

Shishu, Kishor, and Tarun.

Loan Amount under each Scheme

Rs. 1,00,000 is the maximum loan amount.

Loan up to 50,000 rupees under Shishu.

The loan is from 50,000 to 5 lakh rupees under Kishore Loan from 5,000 to 10 lakh rupees under Tarun.

Purpose of loan

To launch a new business, grow a current one, fulfill working capital needs, and expand the business.


No lender requires it.

Repayment tenure

12 months to 5 years, but it may exceed this.

Mudra loan Schemes

Following is a list of the three different loans offered by Mudra Yojana, along with the loan amount and its purpose:

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  1. Shishu

Shishu offers up to Rs. 50,000 in loans to entrepreneurs who are either starting a company or are in the early stages of one within the MUDRA loan program. Borrowers must also supply information on the supplier of the machinery.

  1. Kishor

Kishor provides up to Rs. 5 lacks under the MUDRA loan program to people who need extra money to grow their businesses. Additionally, borrowers must provide a report detailing the business's technical and commercial viability.

  1. Tarun

According to the Pradhan Mantri MUDRA loan program. Tarun offers up to Rs. 10 if the company owner satisfies specific requirements.

List of Business Activities Eligible for MUDRA Loans

  1. Public, commercial, and community services

You can apply for financing for small and medium enterprises like tailoring, dry cleaning, bike, and motorcycle repair shops, pharmacies, photocopying services, gyms, salons, courier services, etc.

  1. Textile Manufacturing

MUDRA Loans can be applied for handlooms, power looms, chikan work, khadi activities, zari and zardozi work, embroidery and handwork, computerized embroidery, dyeing and printing, clothing designing, cotton ginning, knitting, car and furnishing accessories, and other purposes.

  1. Transport Services

You may purchase vehicles to carry passengers and cargo, as well as tractors, two-wheelers, trolleys, and tillers for business use.

  1. Activities Related to Agriculture

Fish farming, beekeeping, poultry, cattle, dairy farming, and other linked agricultural enterprises are also eligible for MUDRA Loans. Such loans cannot be used for irrigation, wells, or the production of crops.

  1. Shop owners and traders

MUDRA Loans offers financial assistance with a loan size of up to INR 10 Lakhs to shop owners, merchants, small company owners, and those who operate enterprises that generate revenue from sources other than agriculture.

  1. Food Producing Sectors 

MUDRA Loans are available for small-scale food productions such as pickle or papad making, home baking, rural agricultural produce preservation, small food stalls, sweet shops, catering, canteen services, cold storage, ice-producing micro-units, bakery-producing units, and so on.

  1. Micro Unit Equipment Financing Scheme

MUDRA Loans of up to INR 10 Lakhs can purchase the necessary machinery to establish micro-enterprises.

Advantages of a MUDRA Loan

  1. Higher Loan Amount

MUDRA Loans have a maximum sum of INR 10,00,000, so you may choose to take out smaller loans for smaller enterprises while still having access to larger loans as needed.

  1.  Support local Indian businesses

The "Make In India" campaign can provide investment possibilities for start-ups thanks to the MUDRA Loan scheme, which strengthens India's infrastructure.

  1. Reasonable interest rates

The MUDRA programs provide reasonable interest rates for flexible and cost-effective loan repayment.

  1. Accessibility

You can utilize the banking and financial services offered by the PMMY program whether you live in a rural or metropolitan region. People from the most distant locations, where there are no essential banking services, can obtain financial assistance.

  1. Credit Assurance

The "Credit Guarantee Fund for Micro Units" or CGFMU Funds was established by the government to address the problems brought on by the non-collateral requirement and to provide lending institutions some peace of mind.

  1. No lower limit on the business size

Small and tiny enterprises, as well as startups, can receive financial assistance.

  1. Start-up funding for a new business

Individuals who want to earn a second income through low-cost companies can take advantage of the plan. Micro-credit schemes provide loans of up to INR 1 lakh, allowing you to launch a side company.

  1. MUDRA Card

MUDRA Loan candidates are given a Mudra Card, a form of debit card they may use to fund their working capital needs. Applicants can use their cards to make online purchases, ATMs, and point-of-sale (PoS).

Documents Required

  1. Application form with passport-sized photos.

  1. KYC documentation for the applicant and co-applicants: Passport, voter identification card, Aadhar card, driver's license, PAN card, and utility bills (water/electricity bills).

  1. Proof of membership in a particular category, such as SC/ST/OBC/Minority, and so on (if applicable).

  1. Bank statement from the previous six months.

  1. Proof of business address and tenure, if applicable.

  1. Any further documentation requested by the bank/non-banking finance company.

Note: The Mudra loan application form must be filled out and submitted separately for Shishu. However, it is similar to the Kishor and Tarun lending programs.


"MUDRA is a financial institution that provides refinancing. MUDRA does not make direct loans to microenterprises or individuals. Mudra loans under the Pradhan Mantri Mudra Yojana (PMMY) can be obtained via a nearby branch office of a bank, NBFC, MFIs, or other financial institutions. Borrowers may now apply for MUDRA loans online using the Udyamimitra portal (

Note: MUDRA does not use any agents or middlemen to facilitate the acquisition of Mudra Loans. Borrowers are urged to avoid those acting as MUDRA/PMMY Agents/Facilitators.

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