PM MUDRA Yojana — Business Loans Up to ₹10 Lakh Without Collateral

Pradhan Mantri MUDRA Yojana (PMMY) was launched in April 2015 to provide affordable credit to micro and small enterprises that are unable to access formal banking credit. MUDRA stands for Micro Units Development and Refinance Agency. The scheme has disbursed over ₹23 lakh crore to more than 40 crore beneficiaries since inception.

What is PM MUDRA Yojana?#

MUDRA provides loans to non-corporate, non-farm small/micro enterprises through banks, MFIs (Microfinance Institutions), and NBFCs. The loans are collateral-free and available for:

• Starting a new business
• Expanding an existing business
• Working capital requirements
• Equipment purchase
• Business infrastructure

Three Categories of MUDRA Loans#

| Category | Loan Amount | Target | |----------|------------|--------| | Shishu | Up to ₹50,000 | Startups and very small businesses | | Kishore | ₹50,001 – ₹5 lakh | Established businesses needing growth capital | | Tarun | ₹5 lakh – ₹10 lakh | Larger micro enterprises |

Who is Eligible?#

Eligible Borrowers

• Individuals (proprietors)
• Partnership firms
• Private limited companies
• Public companies
• Any other legal entities

Eligible Business Activities

• Manufacturing: Small manufacturing units, artisans, food processing
• Trading: Shopkeepers, vendors, traders
• Services: Repair shops, salons, tailors, transport operators
• Agriculture-allied: Poultry, fisheries, beekeeping, agri-clinics
• Professional services: Doctors, CA, engineers (for equipment purchase)

Who is NOT Eligible

• Agricultural activities (crop loans)
• Businesses with loan requirements above ₹10 lakh
• Businesses already covered under other government credit schemes

Key Benefits#

1. No collateral required — no need to pledge property or assets
2. No processing fee for Shishu category loans
3. MUDRA card — a RuPay debit card for working capital needs
4. Flexible repayment — tenure up to 5 years
5. Competitive interest rates — linked to MCLR, typically 8–12%
6. Women entrepreneurs — priority lending and lower rates
7. SC/ST/OBC entrepreneurs — special focus and priority

Documents Required#

For Shishu Loans (up to ₹50,000)

1. Identity proof (Aadhaar, PAN, Voter ID)
2. Address proof
3. Passport-size photographs
4. Business proof (if existing business)
5. Quotation for equipment/machinery (if applicable)

For Kishore and Tarun Loans

1. All Shishu documents plus:
2. Last 6 months' bank statements
3. ITR for last 2 years (if applicable)
4. Business plan / project report
5. Proof of business existence (registration, GST, trade license)
6. Balance sheet (for Tarun category)

How to Apply#

Online Application

1. Visit udyamimitra.in (official MUDRA portal)
2. Register with mobile number and email
3. Fill application form with business and personal details
4. Upload required documents
5. Submit application
6. Bank will contact you for further processing

At Bank Branch

1. Visit any scheduled commercial bank, RRB, or cooperative bank
2. Ask for MUDRA loan application form
3. Fill form with business details and loan requirement
4. Submit documents
5. Bank processes application (typically 7–15 working days)

Through MFI/NBFC

1. Contact local Microfinance Institution or NBFC
2. Particularly useful for very small loans (Shishu category)
3. Faster processing, more flexible criteria

Interest Rates#

MUDRA loan interest rates are not fixed by the government — each lender sets their own rate based on:

• Borrower's credit profile
• Loan category (Shishu/Kishore/Tarun)
• Lender's MCLR
• Business risk assessment

Typical rates:

• Shishu: 10–12% p.a.
• Kishore: 9–12% p.a.
• Tarun: 8–11% p.a.

MUDRA Card#

A MUDRA card is a RuPay debit card issued with the loan for working capital management:

• Withdraw cash as needed (up to sanctioned limit)
• Pay suppliers directly
• Track expenses
• Reduces interest cost (pay interest only on amount used)

Sector-Specific MUDRA Schemes#

• Weaver MUDRA: For handloom weavers
• Pradhan Mantri Mudra Yojana for Women: Priority for women entrepreneurs
• Kishor MUDRA for SC/ST: Special focus on marginalized communities

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Frequently Asked Questions#

Frequently Asked Questions#

1. What is the maximum loan amount under MUDRA?

The maximum loan under PM MUDRA Yojana is ₹10 lakh under the Tarun category. For Shishu, it's up to ₹50,000, and for Kishore, it's ₹50,001 to ₹5 lakh.

2. Is collateral required for MUDRA loans?

No. MUDRA loans are collateral-free. You don't need to pledge any property or assets. However, lenders may ask for a personal guarantee for larger loan amounts.

3. What is the interest rate on MUDRA loans?

Interest rates are not fixed by the government. They vary by lender and category, typically ranging from 8–12% p.a. Compare rates from multiple banks before applying.

4. Can I get a MUDRA loan for a new business?

Yes. MUDRA loans are available for both new and existing businesses. For new businesses, you'll need a business plan and may need to start with the Shishu category.

5. How long does MUDRA loan approval take?

For Shishu loans, approval can be as fast as 7–10 working days. Kishore and Tarun loans may take 15–30 working days depending on the lender and documentation.

6. Can women get special benefits under MUDRA?

Yes. Women entrepreneurs get priority under MUDRA. Some banks offer lower interest rates (0.25–0.5% reduction) and faster processing for women-owned businesses.

7. What is the repayment tenure for MUDRA loans?

MUDRA loan repayment tenure is typically 3–5 years. Working capital loans may have shorter tenures. The tenure depends on the loan amount and lender's policy.

8. Can I apply for MUDRA loan online?

Yes. Apply online at udyamimitra.in. You can also apply through the bank's website or mobile app if the bank offers online MUDRA loan applications.

9. Is there a subsidy on MUDRA loans?

MUDRA loans themselves don't carry a direct interest subsidy. However, under certain government schemes (like PMEGP), you may get a capital subsidy of 15–35% on the project cost.

10. What happens if I default on a MUDRA loan?

Defaulting on a MUDRA loan negatively impacts your credit score, making future borrowing difficult. The lender can take legal action to recover the loan. Always communicate with the lender if you face repayment difficulties.