Hello Friends, Today I am going to tell you about Prime Minister Mudra Yojana (PMMY) or many people call it Mudra Loan which is one of the flagship schemes launched by the Government of India on April 8, 2015.
Its main aim is to provide loans to non-corporate, non-farm small/micro enterprises through Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs), Public as well as Private Sector Banks, Regional Rural Banks (RRBs), State and Urban Co-operative Banks and Foreign Banks.
Under this scheme, anyone who wants to start a business can take a loan up to Rs 10 Lakh.
Vision of PMMY Mudra Loan
To be an integrated financial and support services provider par excellence benchmarked with global best practices and standards for the bottom of the pyramid universe for their comprehensive economic and social development – Source (Mudra.org)
Mission of PMMY Mudra Loan
To create an inclusive, sustainable and value-based entrepreneurial culture, in collaboration with our partner institutions in achieving economic success and financial security – Source (Mudra.org)
Types of Mudra Loan
The Government of India provides Mudra Loans to three different categories which are basically based on the development phase or funding needs of an enterprise. The three different categories are:
- SISHU: Entrepreneurs who are going to start a new business or any micro startup comes under this category. The maximum loan one can get under this category is Rs 50,000.
- KISHOR: Entrepreneurs who already started their business but need financial support to run their business or want to expand their business can come under this category. They can take a loan in the range of Rs 50,001 to Rs 5 Lakh.
- TARUN: The last category in this PMMY Scheme is basically targeted to those enterprises that are already well established and want to expand their business. In this category, they can take a loan from Rs 5 Lakh to Rs.10 Lakh.
Refer to our Youtube Video on IndiansJobEntry for clear details in Hindi:
Eligibility Criteria for Mudra Loan :
Any individual or a team who is a citizen of India that wants to set up a non-corporate non-farm enterprise or already set up their enterprise but wants to expand and need credit loans up to Rs 10 lakh are eligible to take the benefits of PMMY.
How to Apply :
Those who want to take the benefits of Mudra Loan, they can approach to nearest –
- Non-Banking Finance Companies (NBFCs)
- Micro Finance Institutions (MFIs)
- Regional Rural Banks and Cooperative Banks
- Private Sector Banks
- Public Sector Banks
- State and Urban Co-operative Banks and Foreign Banks
It is noted that the Government of India has set some parameters that any banks or financial institutions must satisfy to give PMMY benefits to their customers. So for this reason, not all the banks and institutions are providing Mudra Loans. It is advisable for the applicant to ask from their respective banks and financial institutions whether they are providing Mudra Loans or not before applying for Mudra Loan.
Applicants can get more information from Mudra.org for the online process of Mudra Loan.
Who can get Mudra Loans?
Mudra Loan is available for the following categories
- Vendors Traders or any service sector can take the loan for their business.
- Micro Units can take loans for their equipment, machinery, etc.
- For the purchase of transport vehicles, tractors, two-wheelers, three-wheeler, or four-wheelers that can be used for commercial purposes only, can get loans under this scheme.
- Shops like mobile repair shops, motorcycle repair shops, medicine shops, salons, beauty parlors cover under these schemes.
- The main benefit of PMMY is applicants do not need any collateral or security to get benefits from Mudra Loan.
- There are no processing charges under this scheme.
- It mainly targets the MSMEs which is one of the major sectors in India’s economy that helps to produce huge employment.
Credit Guarantee :
In India, Banks and other financial institution follows a collateral approach while giving loans to any micro-unit. It means micro units need to produce a guarantee while taking loans. But Mudra Loan brings a revolution in this approach by providing collateral-free loans to micro units up to Rs 10 Lakh as per the RBI norms.
Government Of India created the Credit Guarantee Fund for Micro Units [CGFMU] to ensure collateral-free loans to micro-units. Those micro-loans that are sanctioned since April 08, 2015, are covered under the above guarantee. National Credit Guarantee Trustee Company Ltd. [NCGTC] is responsible for the management of this scheme.
After approval of the application for Mudra Loan, the bank will give a Mudra Card to the borrowers. Mudra Card is basically a debit card that helps the borrowers to make withdrawals and credits and can manage Mudra Loan in a cost-efficient manner. Borrowers can also keep and track the transaction history and credit history through mudra card. Anyone who has Mudra Card can withdraw cash from any ATM or can do payment through any Point of Sale (POS) machine.
Boost in “Make in India” Campaign :
For the growth of enterprise in India, the Government Of India take several steps. Make In India is one of the movements initiated by GOI. It is basically designed to enhance skill development and better use of innovation by providing investment.
As Make In India and Startup India like campaign performs better while creation of enterprise or promoting the creation of enterprise, Mudra Loan boost this campaign by easing the process of getting collateral-free loans.
Challenges Faced in this scheme:
Following challenges faced by Non-Corporate Small Business (NCSBS) apart from financial support.
- The Skill Development gap is one of the most important things that help in the growth of a business. If there is a lack of skills and knowledge then the purpose of PMMY cannot be fulfilled.
- If the Location cannot choose wisely means if the business is set up at a location where there is very little or less scope of growth of the business, then also the purpose will not be fulfilled.
- If there is a lack of marketing of the product of business then also the purpose will not get fulfilled.
To handle these type of challenges, the Government of India is planning to adopt a credit plus approach that basically helps in the development and support services to the entrepreneurs who is struggling with noncredit challenges
PMMY an initiative by the Government of India helps in creating an environment where the entrepreneurs can easily set up their own enterprise and help to create huge employment and thus boost India’s economy.
In this article, I tried to cover all the topics that you should know before applying for Mudra Loans and also about the benefits and of these schemes. Hope this article will help you to know about PMMY.
If you want to read more such articles, do check them out at BharatGlobal. If you have any queries regarding this Government Scheme, do let me know in the comments section below, I’ll be ready to help!