An In-depth Insight Into Mudra Loan Details

In 2015, the government of India established the Micro Units Development and Refinancing Agency Ltd (MUDRA), a refinancing agency designed to encourage and facilitate the growth of small and medium-sized enterprises (SMEs) in India. Microfinance institutions, NBFCs and banks receive MUDRA’s refinancing support so that they, in turn, can lend to micro units with needs as low as Rs 10 lakh. Government data show that since the inception of the Pradhan Mantri Mudra Yojana, a total of Rs 30 crore in loans, equivalent to Rs 15.97 lakh billion, have been approved. MSME Blog offers finance, technology, and policy expertise to help small and medium businesses succeed and grow in the global economy. Here’s an ultimate guide on Mudra loan details.

Exploring the Mudra Loan Details

Micro-enterprises in the manufacturing, service and trading sectors, among others, can apply for loans through the PM’s Mudra credit programme. The maximum loan amount is INR 10,000,000.

Key Objectives
The government established Mudra finance to achieve certain aims. Below are some of the government’s main priorities for this programme. The government intends to create policies and guidelines for lending to small and micro-businesses. To better control microfinance institutions and related businesses, it is necessary to first:

  1. Ensure that all relevant businesses are properly registered.
  2. Plan and assist micro and small businesses with expansion plans.
  3. Encourage people from low-income backgrounds to become entrepreneurs and develop successful businesses.
  4. Extend credit to members of the SC/ST community.
  5. Lower financing expenses so that people who don’t have bank accounts can gain quick access to finances.
  6. Control the lending practices of microfinance institutions that cater to commercial enterprises engaged in production, service, and commerce.

What Are the Different Types of Mudra Loan Schemes?

The Pradhan Mantri Mudra Yojana provides funding in the form of three distinct Mudra Loan Schemes. They are:

Shishu Yojana
The maximum loan amount for the Shishu Yojana is Rs 50,000. This loan can be helpful for people who want to start a company or already have one but need money for operational expenses. Shishu Yojana loans incur no application fees.

Kishore Loan
One can borrow between Rs. 50,001 and Rs. 5,00,000 with the Kishore Loan. Existing companies are the best candidates for this loan. Kishore Yojana loans do not have origination fees.

Tarun Loan
The Tarun Loan is a short-term unsecured loan with a maximum lending amount of Rs 10,000,000. Loans obtained under the Tarun Yojana are subject to a processing fee of 0.50% plus taxes.

What Are the Features of the Mudra Loan?

The various features of the Mudra loan are mentioned below. They are:

  • Start-ups and established businesses can apply for loans.
  • Manufacturing, service, and commerce were the major areas of interest for PMMY.
  • Unsecured loans like the ones offered through the Pradhan Mantri Yojana are available.
  • This loan has a repayment term of three to five years.
  • Mudra loan proceeds may be used for any lawful business purpose.
  • You can spend that money on things like expanding your team or reorganizing your firm.

Advantages of Mudra Loan
Mudra loans are unsecured, meaning you don’t need to put up any collateral to get one. Mudra loans come in a number of different structures to meet the varying capital requirements of different firms. Overdrafts, term loans, bank guarantees, and letters of credit are all examples of financial products that can be obtained with good credit. Scheduled caste and tribe business owners are eligible for lower lending rates through the PMMY programme.

Thus, Mudra loans provide an excellent opportunity for micro-enterprises to grow and flourish in India, with unsecured loans, flexible repayment terms and lower lending rates for scheduled caste and tribe business owners. To know more about the mudra loan scheme and other MSME loan programs, check out our MSME blog.

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