July 1, 2024
MUDRA, as you know, stands for Micro Unit Development and Refinancing Agency. This is a scheme the Union Government announced in its budget for FY 2015-2016. The initiative targets small entrepreneurs. What sets it above other loans is its expansive reach. It covers those units of businesses that banks generally avoid.
MUDRA Yojana loan scheme
MUDRA is a refinancing scheme MUDRA Ltd, a subsidiary of SIDBI (Small Industries Development Bank of India) offers. It provides refinancing facilities to micro-financial institutions and banks against the loans they have given for micro and small businesses. The ultimate goal of this scheme is to protect small entrepreneurs from high-end money lenders.
India is the seventh-largest country in the world. It has many places where access to regular banking is quite limited. MUDRA Yojana loan scheme aims to help these people. The scheme offers all the facilities regular banks provide. Loans, savings account, and credit cards are just a few to mention among them.
Micro-finance is a tool that aims to help the people at the lowest end of society concerning income. In addition to offering banking facilities, the scheme offers financial literacy, social support, and numerous other services.
SIDBI is the bank entrusted with the task of refinancing facilities to banks and other entities that provide loans to micro and small enterprises. The scheme gives priority to ventures in the service, manufacturing, and trading sectors. MUDRA collaborates with banks and other financial institutions to make it happen.
Opting for a MUDRA Yojana loan offers you the following advantages:
The loan amount available under this scheme starts from INR50000. The maximum amount is INR1000000. The loan repayment terms and other facilities are arranged in such a way as to help budding entrepreneurs. You can use the amount to start, expand or carry daily operations of your firm.
MUDRA Yojana loan does not require collateral. You can avail of this loan without offering any or any of your personal or business assets as a guarantee to avail of this loan.
You don’t have to pay any extra charge to avail of this loan. If at all there is a charge, that is a processing fee. It comes only up to 0.5% of the entire loan amount.
The scheme offers a credit guarantee facility to its beneficiaries. This risk-sharing service is offered for a set of loans instead of the individual loan guarantee. This makes the product more effective and popular among young entrepreneurs.
The scheme offers support in promoting your products and services. It also provides financial literacy and assists you to evolve yourself as per the requirements of the market.
Schemes
You are eligible for a MUDRA loan if your venture belongs to any of the following categories:
Keep the documents given below at hand when applying for a MUDRA Yojana loan:
| Proof of identity | Aadhar, PAN card, driving license etc. |
| Proof of address | Electricity bill, gas bill, phone bill, etc. |
| Proof of business | Business registration certificate |
Almost all reputed financial institutions offer MUDRA loans.
Fill the application form your choice financial firm provides. Mention and furnish all the documents required. Indicate the loan amount.
Before doing that, check your eligibility based on the three categories the scheme has. They are mentioned above.
Given below are the main features of the scheme:
| Interest rate | Varies based on the bank you choose and your requirements |
| Security | Not required |
| Minimum amount available | No set limit |
| Maximum amount | INR1000000 |
| Loan repayment tenure | 3-5 years |
| Processing fee | Nil |
This is a debit card your lender issues for your MUDRA Yojana loan account. You get its portion of the working capital. Borrowers are free to withdraw the money multiple times. This lets you take care of the daily expenses of your business without draining your budget. The facility also reduces the burden of interest on you. Just see that the withdrawal does not exceed the amount available. It is the government’s tool to digitalize the entire process. You may withdraw money from any ATM in the country. It also lets you pay your loan from home.
The scheme also offers loans tailor-made for women. All-female small-business owners are eligible for the same.
You need to be an Indian citizen to avail a MUDRA Yojana loan.
Applying for a MUDRA loan online is quite easy. Have all the required documents at hand, visit the company’s official website, fill the application form and submit; done. Follow the instructions you see on the next page.
As a business owner, you may face the following issues when applying for a MUDRA loan:
No. This is something your lender decides.
Yes. You can prepay your loan anytime during the loan tenure.
The repayment of the MUDRA Yojana loan starts the next month after you avail of the loan. The lender may allow more time if your business does not have a stable flow of cash.
Generally, lenders disburse the loan directly to the borrower’s bank account. Sometimes, they may even issue checks in favor of the borrower.
No. the MUDRA scheme does not offer any subsidy. If your business is concerning any government scheme that offers subsidies, you may avail of the same under this scheme.
You may complain to your chosen bank’s higher authority in the instance of any complaint. See to it that the bank has not fulfilled its responsibility. You need to offer proof of the same.
No. Obtaining life insurance is not a must for a MUDRA Yojana loan. But a decision in this regard depends on your lender.
Yes. MUDRA loan is available for any business that generates an income.
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Disclaimer: The information provided on the website is only for informational purposes and is not intended to, constitute legal advice, instead of all information, content, and other available materials.
