What is a Mudra Loan, its Eligibility, Interest Rate, and how to apply online?

MUDRA loan is one of the government loan schemes for small businesses in India. These loans have proved beneficial for businesses from profit and non-profit sectors, as they have low cost and worth of credit. Under the MUDRA scheme, an individual or an enterprise seeking a loan can get financial aid up to 10 lakhs. Here's all you need to know about eligibility, interest rate and online application.

A large number of MSME are housed in India, and many of them have cropped up owing to the pandemic. More often than not, almost half of these new businesses suffer due to a lack of funds, which may even bring them to a halt. The GOI has introduced several schemes like "vocal for local" and MUDRA to support MSME.  PMMY (Pradhan Mantri Mudra Yojana) scheme helps micro, small, and medium businesses avail loans at reasonable rates.

What is MUDRA?

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MUDRA loan is one of the government loan schemes for small businesses in India. MUDRA stands for Micro Units Development and Refinance Agency. These loans have proved beneficial for businesses from profit and non-profit sectors, as they have low cost and worth of credit. Under the MUDRA scheme, an individual or an enterprise seeking a loan can get financial aid up to 10 lakhs.

What are the highlights and benefits of the MUDRA loan?

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Several features of MUDRA distinguish it from other government-backed schemes. Let's take a look at the highlights of the MUDRA scheme.

●    PMMY scheme is mainly to lend money to companies engaged in manufacturing, trading, and services. These companies can be new as well as old.

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●    The tenure of MUDRA loan is between 3 years to 5 years at affordable interest rates based on RBI defined MCLR (marginal cost of lending rate).

●    The borrowers are not required to submit any collateral to avail the benefits of the MUDRA loan.

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●    Also, there are no processing charges applied.

●    There is no base sum required to avail of the loan.

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●    It's quite easy to withdraw a loan from the bank. They can be availed in the form of letters of credit, overdraft facility, etc.

●    The businesses are allowed complete authority on the loan money. They have all the liberty to utilize it the way they want to, e.g., buying machinery, expansion, staffing, etc.

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What are the types of MUDRA loans?

There are three types of MUDRA loans. These are:

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1. Shishu:

The maximum amount sanctioned under this class is Rs 50000. You need to provide the finance for the machinery and equipment. This class is focused on entrepreneurs who are in the process of starting their businesses.

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2. Kishor:

MUDRA scheme allows banks to lend from 50000 to 5 lakh under this class. This classification of loans is provided to people who are in the pursuit of expanding their businesses.

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3. Tarun:

The third class is called Tarun. This class is for businessmen who have settled in their businesses but want to expand and broaden their business.

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Who can avail of the benefit of the MUDRA scheme?

  • The PMMY scheme is specially designed for MSME involved in trading, processing, manufacturing, and services. 
  • All non-corporate and non-farm undertakings are equally eligible. 
  • But some allied farm sector enterprises like fisheries and horticulture are also eligible. 
  • You need to be in the age group of 18 to 65 years

How to apply for the MUDRA loan online?

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Applying for the PPMY scheme is made easy with the MUDRA website and MUDRA app. You can follow the below-mentioned steps to avail of the MUDRA loan online in a hassle-free manner.

●    Arrange your documents

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You need to have the necessary documents at your convenience to avail MUDRA loan online. First, you need solid identity proof like Aadhaar, driving license, voter ID or PAN, etc. The second most important document is your address proof like a water bill, phone, electricity bill, etc. You also need some evidence of your business (registration certificate).

●    Contact the bank

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The next step is to approach a financial institution and make contact with a representative regarding the loan. Or you can do it online. Practically all leading banks allow an application of MUDRA loan online. 

●    Fill in the form

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You can download the loan form online from any bank's website or the official website of MUDRA (www.mudra.org.in). Produce this filled form, coupled with your documents, in front of the bank representative. The bank will do some background checks and documentation. The bank may also have some additional procedures before passing the loan.

FAQ

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•    Do health and physical disability affect the eligibility of the person applying for the loan?

Your physical disability is not a hindrance to your eligibility. There is no discrimination against the specially abled.

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•    Can food processing businesses themselves of MUDRA loans?

Small businesses that offer homemade food, pickles, papads, sweet shops, etc., are eligible.

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•    I have graduated recently. I want to start my own business. Can MUDRA help me?

MUDRA loan is available in three classes: Sishu, Kishor, and Tarun. For example, if you want to start your business, you can get a loan of Rs 50,000 under the MUDRA Sishu scheme. But if you want to expand your business, you can avail loan under Kishor and Tarun, based on your eligibility.

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•    Is there any grievance mechanism available in the event of non-sanction of loan?

The higher authority of respective banks will do grievance redressal.

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•    What is the main idea behind the MUDRA scheme?

The main idea behind the MUDRA scheme was to support local and small businesses.

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•    What is a MUDRA loan card?

It is a debit card that allows the borrower to avail of credit easily. It is a Rupay debit card and can be used at the point of sale directly or ATM.

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•    What is the repayment and processing time of the loan?

The processing time of MUDRA is 24 hours, while its repayment is 12 to 60 months.

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•    Can the loan be availed via offline method?

The loan can be availed offline as well in online mode. You can visit any bank or branch and meet with the executive to start your process, or you can visit the official website of MUDRA or the bank to start your loan procedure online.

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•    What is the interest rate of the MUDRA loan?

MUDRA interest rate depends on the RBI-defined MCLR (marginal cost of lending rate).

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•    Is PPMY applicable to all loans all over India?

Yes. Almost all leading banks of the country offer MUDRA loans.

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