In India, Micro Enterprises is a major economic segment of our country. It provides employment to about 10 crore peoples which is the second largest after agriculture. This segment includes unit engaged in manufacturing, processing, trading and service sector. It was not easy for them to raise money from the formal sector at lower interest rates to boost their business. So, Pradhan Mantri Mudra Yojana was launched by Government of India to provide them MUDRA loans at an interest lesser than which informal lenders charge to them.
Pradhan Mantri Mudra Yojana (PMMY) is a pan India scheme launched by Prime Minister in April 2015. Under MUDRA (Micro Unit Development Refinance Agency) Yojana, MUDRA Bank was also established by the government with an initial capital of 20,000 crore rupees and credit guarantee fund of 3,000 crore rupees. This scheme will provide loans of up to 10 lakh rupees to non-corporate and non-farm small micro-enterprises.
Mudra Bank was established as a refinancing institution headquartered in Mumbai. It is a wholly owned subsidiary of Small Industries and Development Bank of India (SIDBI). Mudra bank doesn’t lend directly to the beneficiaries, instead, it provides loans to microfinance institutions and Non-Banking Financial Companies (NBFCs) which then further lend to MSMEs. To avail loan, the borrower can either approach any lending institution or can apply online.
Types of Loan under Mudra Yojana
Mudra loan doesn’t require any collateral as security to avail loans. Three products have been created under this scheme which is given below:
a). Sishsu Loan
Sishu loan amount is limited to 50,000 rupees. It can be availed by those businesses that are in their initial stages. The repayment period for the loan can be up to 5 years with an interest rate of 12 per cent to 18 per cent or may be less or more based on the discretion of the bank.
b). Kishor Loan
In Kishor loan, the amount of loan ranges between 50,000 rupees to 5 lakh rupees. It can be availed by those who have well-established enterprise. The time period of loans is on the discretion of the bank.
c). Tarun Loan
In Tarun loan, the amount varies between 5 lakh rupees to 10 lakh rupees which is the maximum limit. It can be availed by those businesses that are well established but require funds for the purpose of business expansion. The time period of the loan is on the discretion of the bank.
Eligible beneficiaries to avail Mudra loan
- Small manufacturing units.
- Fruits/Vegetable vendors.
- Truck and taxi operators.
- Foodservice units.
- Repair shops.
- Machine Operators.
- Small industries.
- Street vendors and many others.