Mudra Yojana: Creating Opportunities For The Primary Sector

Last Updated at: March 11, 2020
303
All about Mudra Yojana

To curb the unemployment problem, the government of India has introduced several schemes over the past few years, of which the Mudra Yojana is an important one. 

  1. What is PMMY?

  2. Mudra- An overview

  3. Types of Mudra Loans

  4. Uses of Mudra Loan

  5. The interest rate under Mudra Yojana

  6. Documents required for Pradhan Mantri Mudra Yojana

  7. Mudra Yojana and women

  8. Conclusion

 

What is PMMY?

On the 8th of April, 2015, a flagship scheme was launched by the government of India, named as the Prime Minister Mudra Yojana, under which loans are extended to the micro section, non-corporate, and small enterprises in the rural region, offering them with support for funds and finances. Under this scheme, the government aims at catering to two main objectives. These include:

  • Opportunity for employment under small enterprises
  • Self-employment through easy lending of loans

MUDRA- An overview

MUDRA stands for Micro Units Development and Refinance Agency. Under the mudra yojana scheme, the small enterprises and individuals are eligible for getting mudra yojana loans with a maximum amount of Rs.10 lacs. This loan can be obtained through commercial banks, cooperative banks, NBFC, etc. The borrowers can apply for the loan either online or through their nearest bank branch. 

Even though the small enterprises and primary sector consist of the economic bulwark for employment generation in the country, it is one of the most disorganized sectors, due to which the citizens are unable to avail of the financial benefits. And so, to facilitate the GDP and employment growth of the nation, schemes like MUDRA yojana are being introduced by the government.

Types of MUDRA loans

Depending on several parameters and stages of business expansion, the government offers three types of MUDRA loans of varying amounts, with specific business and document requirements. These include:

  • Sishu: Under this type of MUDRA yojana loan, the maximum loan amount that can be sanctioned is ₹50,000. This is offered to the individuals looking to start a small-scale business. The basic aim is to provide the individuals with the basic cost for supplies and equipment required for establishment.
  • Kishor: Under this type of MUDRA yojana loan, the range of loan amount that can be sanctioned is ₹50,000-₹5,00,000. This can be sanctioned by the well-established businesses seeking growth and expansion, for which there is a requirement of funds. It can be lent only if the business fulfils the following requirements: 
    • Bank account statement and balance sheet for the previous two years.
    • Records of income and sales.
    • Balance sheet for the present year.
    • The viability of the business and the project on which the government is investing (i.e., sanctioning a loan) both economically and technically.
  • Tarun: Under this type of MUDRA yojana loan, the range of loan amount that can be sanctioned is ₹5,00,000- ₹10,00,000. This can be sanctioned by the businesses that are well-established, and want to further expand and diversify it. The requirements for Tarun loan include the following: 
  • The requirements for the Kishor loan must also be fulfilled by Tarun loan.
  • Additionally, the identity and address proof must also be produced during the time of loan sanction.
  • Caste certificate (if eligible).

No collateral has to be kept for lending the loan under MUDRA yojana, additionally, no processing fee is charged.

Uses of Mudra Loan

You can avail this loan for the following benefits –

  1. Purchase of Vehicle – You can purchase two-wheelers, car and commercial vehicle.
  2. Renovation: This can be availed for renovating an office and plant & machinery.
  3. Rural business credit: Dropline overdraft/working capital loan helps in rural businesses. 

Get free legal advice now

The interest rate under MUDRA Yojana

The MUDRA yojana rate of interest is applied as per the Marginal Cost of Lending Rate (MCLR) as defined by the RBI. It depends on the type of MUDRA yojana scheme under which the loan is being sanctioned, however, the minimum rate of interest is 12% for all the types. Additionally, the loan repayment period is usually 3-5 years, or as decided by the bank.

Required Documents for Pradhan Mantri Mudra Yojana

Vehicle Loan:

  • Application Form
  • Passport sized colour photographs
  • Photo identity proof
  • Income & address proof

Business Installment Loan:

 

  • Application Form – BIL
  • Address & Identity proof
  • Establishment proof
  • Bank statement (last 6 months)
  • Residence proof
  • Business Continuity Proof
  • Proof of qualification
  • References for trade
  • ITR of the last 2 years
  • CA certified financials

Business Loans Group & Rural Business Credit

  • Mudra application Form
  • BIL/RBC application form
  • Identity & Age proof
  • Address proof
  • Ownership proof of residence/office
  • Business vintage proof
  • Bank statement (past 1 year)
  • Income tax return (last 2 years)

MUDRA Yojana for women

The Micro Units Development and Refinance Agency Yojana UPSC targets on the microfinance, which acts as an economic development tool for the country. Also, as per the statistics, about 75% of the loans under this scheme are being taken by women, making the MUDRA yojana scheme for women a great opportunity for self-employment and becoming independent.

Conclusion

As such, the PMMY loan scheme introduced by the government with the aim of ‘funding the unfunded’, has been a great step towards the economic development of the rural sector, opening better employment opportunities and business expansion. Also, every year an increased budget has been provided by the government under PMMY.

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Mudra Yojana: Creating Opportunities For The Primary Sector

303

To curb the unemployment problem, the government of India has introduced several schemes over the past few years, of which the Mudra Yojana is an important one. 

  1. What is PMMY?

  2. Mudra- An overview

  3. Types of Mudra Loans

  4. Uses of Mudra Loan

  5. The interest rate under Mudra Yojana

  6. Documents required for Pradhan Mantri Mudra Yojana

  7. Mudra Yojana and women

  8. Conclusion

 

What is PMMY?

On the 8th of April, 2015, a flagship scheme was launched by the government of India, named as the Prime Minister Mudra Yojana, under which loans are extended to the micro section, non-corporate, and small enterprises in the rural region, offering them with support for funds and finances. Under this scheme, the government aims at catering to two main objectives. These include:

  • Opportunity for employment under small enterprises
  • Self-employment through easy lending of loans

MUDRA- An overview

MUDRA stands for Micro Units Development and Refinance Agency. Under the mudra yojana scheme, the small enterprises and individuals are eligible for getting mudra yojana loans with a maximum amount of Rs.10 lacs. This loan can be obtained through commercial banks, cooperative banks, NBFC, etc. The borrowers can apply for the loan either online or through their nearest bank branch. 

Even though the small enterprises and primary sector consist of the economic bulwark for employment generation in the country, it is one of the most disorganized sectors, due to which the citizens are unable to avail of the financial benefits. And so, to facilitate the GDP and employment growth of the nation, schemes like MUDRA yojana are being introduced by the government.

Types of MUDRA loans

Depending on several parameters and stages of business expansion, the government offers three types of MUDRA loans of varying amounts, with specific business and document requirements. These include:

  • Sishu: Under this type of MUDRA yojana loan, the maximum loan amount that can be sanctioned is ₹50,000. This is offered to the individuals looking to start a small-scale business. The basic aim is to provide the individuals with the basic cost for supplies and equipment required for establishment.
  • Kishor: Under this type of MUDRA yojana loan, the range of loan amount that can be sanctioned is ₹50,000-₹5,00,000. This can be sanctioned by the well-established businesses seeking growth and expansion, for which there is a requirement of funds. It can be lent only if the business fulfils the following requirements: 
    • Bank account statement and balance sheet for the previous two years.
    • Records of income and sales.
    • Balance sheet for the present year.
    • The viability of the business and the project on which the government is investing (i.e., sanctioning a loan) both economically and technically.
  • Tarun: Under this type of MUDRA yojana loan, the range of loan amount that can be sanctioned is ₹5,00,000- ₹10,00,000. This can be sanctioned by the businesses that are well-established, and want to further expand and diversify it. The requirements for Tarun loan include the following: 
  • The requirements for the Kishor loan must also be fulfilled by Tarun loan.
  • Additionally, the identity and address proof must also be produced during the time of loan sanction.
  • Caste certificate (if eligible).

No collateral has to be kept for lending the loan under MUDRA yojana, additionally, no processing fee is charged.

Uses of Mudra Loan

You can avail this loan for the following benefits –

  1. Purchase of Vehicle – You can purchase two-wheelers, car and commercial vehicle.
  2. Renovation: This can be availed for renovating an office and plant & machinery.
  3. Rural business credit: Dropline overdraft/working capital loan helps in rural businesses. 

Get free legal advice now

The interest rate under MUDRA Yojana

The MUDRA yojana rate of interest is applied as per the Marginal Cost of Lending Rate (MCLR) as defined by the RBI. It depends on the type of MUDRA yojana scheme under which the loan is being sanctioned, however, the minimum rate of interest is 12% for all the types. Additionally, the loan repayment period is usually 3-5 years, or as decided by the bank.

Required Documents for Pradhan Mantri Mudra Yojana

Vehicle Loan:

  • Application Form
  • Passport sized colour photographs
  • Photo identity proof
  • Income & address proof

Business Installment Loan:

 

  • Application Form – BIL
  • Address & Identity proof
  • Establishment proof
  • Bank statement (last 6 months)
  • Residence proof
  • Business Continuity Proof
  • Proof of qualification
  • References for trade
  • ITR of the last 2 years
  • CA certified financials

Business Loans Group & Rural Business Credit

  • Mudra application Form
  • BIL/RBC application form
  • Identity & Age proof
  • Address proof
  • Ownership proof of residence/office
  • Business vintage proof
  • Bank statement (past 1 year)
  • Income tax return (last 2 years)

MUDRA Yojana for women

The Micro Units Development and Refinance Agency Yojana UPSC targets on the microfinance, which acts as an economic development tool for the country. Also, as per the statistics, about 75% of the loans under this scheme are being taken by women, making the MUDRA yojana scheme for women a great opportunity for self-employment and becoming independent.

Conclusion

As such, the PMMY loan scheme introduced by the government with the aim of ‘funding the unfunded’, has been a great step towards the economic development of the rural sector, opening better employment opportunities and business expansion. Also, every year an increased budget has been provided by the government under PMMY.

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