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Pradhan Mantri MUDRA Yojana 2022 | Mudra Loan Scheme

Have you ever wondered what Pradhan Mantri MUDRA Yojana was all about? Do you wish to apply for a Mudra loan and don’t know where to begin?

Or you are an MSME who needs a loan but don’t have access to collateral.

If you read this article till the end, most of your questions would be answered, and you would be one step closer to getting a MUDRA loan.

As a small business, you may not have adequate collateral available to get a loan from banks and other financial institutions.

Most times, the amount available to you may not be enough to push up your business to the point you envisaged.

For this reason, the government of India introduced a loan scheme, called Mudra, in the year 2015.

This was aimed at helping micro-businesses acquire loans without collateral.

What Is The Pradhan Mantri MUDRA Yojana?

Mudra is an acronym for Micro Units Development and Refinance Agency (Mudra) Loan scheme.

It is a loan scheme that gives loans to individuals and MSMEs through the help of banks and NBFCs.

Mudra does not lend to individuals or micro-entrepreneurs directly but through the banks, as mentioned above.

It was created specifically for non-corporate, nonfarm small/micro enterprises to start a new business or help their existing businesses.

Loan amounts of up to Rs10 lakhs are offered through the Mudra loan scheme.

mudra loan scheme

Types/Details Of The Mudra Loan Scheme

Most small businesses that are not corporate have the problem of where to borrow from.

They end up borrowing from informal sources who also have limited opportunities for them.

Not only that, but they also stand a chance of being duped in the process.

The MUDRA loan scheme was built to bridge this gap, providing aspiring entrepreneurs opportunities to establish their businesses and also expand their activities.

PMMY stands for “Pradhan Mantri MUDRA Yojana” and all the loan applications that fall in this category must carry it in their forms.

All offers granted on/after 8th April 2015 and which also come under the categories of MUDRA products mentioned below are classified under PMMY.

The Pradhan Mantri MUDRA Yojana has produced 3 products. They include the following;

  • Shishu
  • Kishor
  • Tarun
1. Shishu

In Shishu, applicants need to present their business idea for their loan to be approved.

This product offers loans up to Rs 50,000 and is given to individuals who need small capital to start their business.

It is best fitted for small or micro business owners.

2. Kishor

This feature is meant for business owners who are looking to expand their business.

Loan amounts under this feature can extend to Rs 5 lakhs with a minimum of Rs 50,000.

3. Tarun

Borrowers under this scheme can apply for loans up to Rs 10 lakhs. All businesses(small) looking to also expand can apply under this scheme.

MUDRA Loans under Kishor and Shishu have zero processing fees.

However, for Tarun, the processing fee is 0.5%. Also, the loans can be repaid for a period ranging from 3-5 years.

As mentioned before no collateral is required neither is there a third party.

Application for Mudra loans does not need any agents nor third-party.

Also Read: Top 5 Government Business Loan Schemes in India

Benefits Of Mudra Loan Scheme

Mudra loans come with a lot of benefits which makes them quite useful for the businesses that key into them. Some of them include;

  1. Availability of loan offers up to Rs 10 lakhs.
  2. The loans are free of collateral and security.
  3. In the Mudra loan scheme, women entrepreneurs are offered loans at lower interest rates.
  4. Mudra loan is covered under a credit guarantee scheme by the Indian government.
  5. These loans can be availed by non-farm enterprises which include small and micro firms that are engaged with income-generating activities.
  6. Generally, Mudra loans have low-interest rates, including lower processing fees.

Reasons For Mudra Loans Scheme

The aim of the Mudra loan scheme for MSMEs include the following;

  • It helps them to expand their business.
  • Mudra Loan helps them to start a new business.
  • It helps them to get working capital for their business.
  • This loan helps them in the purchase of plants and machinery.
  • Mudra loan comes in handy if they want to purchase equipment or vehicles.
  • For hiring new staff or training old ones.
  • They are used for the purchase of plants and machinery.

Who Can Apply For a Mudra Bank Loan?

To be eligible to apply for a Mudra loan, the applicant must not be a defaulter to any financial institution and should have a clean credit track record.

The applicants would also be assessed to ensure that they have the necessary skills or experience to carry on the intended project.

Asides from these requirements, the following persons are eligible to apply for a Mudra loan; Individuals, Partnership firms, Public companies, Private Ltd companies, Other legal forms, etc.

Below is a list of business types that can apply for the MUDRA bank loan;

  • Textile industry
  • Small manufacturers
  • Repairing shops
  • Service sector firms
  • Artisans
  • Business Vendors and shopkeepers
  • Truck owners
  • Agricultural activities
  • Food production sector
  • Self-proprietors

How Can You Apply For A Mudra Bank Loan?

Applying for a MUDRA bank loan is a simple process that can be followed by anyone who decides to go for it.

Below are the steps to take you through the loan application process;

  1. First, you could visit the website on to download the form. Also, there is a list of banks affiliated with the MUDRA loan scheme. You could also visit the nearest of them to submit your application.
  2. Fill the loan application form with your correct details as asked for in the form, then submit.
  3. Also, submit the required documents along with your form. The documents can range from address proof, identity proof, IT returns, etc.
  4. Complete your application by following other procedures by the bank.
  5. Document verification: The banks are to verify the documents you have submitted. After which, the loan gets credited to your account.

Documents Required For The Application Of The Mudra Loan Scheme.

1. Proof of identity, such as a voter’s ID  card, driver’s license, etc.

2. Proof of Residence such as Bank statement, electricity bill, etc.

3. Proof of business address.

4. Document showing the identity and license of the enterprise.

5. Documents showing the quotation of items to be purchased for business use.

6. Your bank statement from the last six(6) months.

7. Proof that the applicant belongs to a special group such as ST, Minority, SC, OBC, etc.

8. A passport photograph of the applicant.

9. Different banks may have slight differences in their mode of application, so any other documents as required by the bank will be added.

Just as initially mentioned above on how to apply for a Mudra loan, applicants can go to banks under the scheme to apply.

However, only banks who are eligible and have met the requirements can offer Mudra loans. Some of those requirements include the following;

Commercial Banks
  • Both the public and private sector banks should have been in business for at least 3 years.
  • They must not have non-performing assets of more than 3%.
  • Also, they should not have a net worth less than Rs 100cr.
  • And for commercial banks, the credit to risk assets ratio of the banks should be more than 9%.
For Regional/rural Banks

This kind of bank, their eligibility or requirement is simply that they must not have non-performing assets of more than 3%.

Also, their credit to risk assets ratio should be more than 9%.

The following banks are currently under the MUDRA loan scheme;

  • City Union Bank
  • Central Bank of India
  • Axis Bank
  • Corporation Bank
  • Federal Bank
  • Bank of Baroda
  • Bank of Maharashtra
  • HDFC Bank Ltd
  • Decan Grameena Bank
  • Andhra Pragathi Grameena Bank
  • DCB Bank
  • Gujarat State Co-op Bank
For NBFC, we have;
  • Magma Fincorp Ltd.
  • Reliance Capital
  • Shriram Transport Finance Co. Ltd.

Features Of The Mudra Loan Scheme

1. Interest Rates:

The interest rates for MUDRA loans are to be decided by the bank’s policy.

However, the rates given to ultimate borrowers should be rational. Also, commercial banks, cooperative banks who wish to offer Mudra loans have to keep their interest rates as advised by MUDRA Ltd.

2. Nature of Assistance

MUDRA loans are not for personal consumption or needs. It is strictly for business, generating working capital, expanding small businesses in their manufacturing, processing, etc.

The amount to be borrowed is calculated based on project cost which depends on the business plan and investment proposed.

3. MUDRA Card

mudra card

MUDRA Card is a debit card that can be used anywhere across the country. It is an innovative and new product of the MUDRA loan scheme.

A MUDRA card is issued to anyone as soon as they have successfully been granted their MUDRA loan.

This is so they can meet their working capital. The loan amount is disbursed in a MUDRA loan account opened for them along with the MUDRA card.

From there they can withdraw the money as per their business requirements.

4. Repayment and availability

For term loans, the repayment can be done in installments. But for OD and OC limits the repayment is payable on demand.

Also, MUDRA loans under PMMY are available in all banks in India that have met the requirements.

It can also be granted by NBFCs who are into financing micro-enterprises.

5. Types of Loans
  • Microcredit Scheme
  • Refinance Scheme
  • Women Enterprise Programme
  • Securitization of Loan Portfolio


MUDRA loan scheme has from its inception helped lots of young entrepreneurs become successful in their businesses.

Between 2015 and 2018, a total of 11.2 million jobs were created. 

The ‘no collateral/security’ feature is a major advantage for most of these businesses as most times, startups and small businesses, do not have access to suitable collateral for the amount of money they require.


1. How long does it take for a MUDRA loan to be approved?

It generally takes about seven(7) working days for the loan to be approved.

The particular bank also has a role to play in the speed of approval.

2. Can a MUDRA loan be applied online?

Yes, you can do that by visiting an eligible bank’s official website.

3. What is the maximum limit of a MUDRA loan?

The limit for MUDRA loans is up to Rs 10 lakhs.

4. What happens if the MUDRA loan is unpaid?

If you don’t pay up your loan, your business assets may be seized and sold to recover the amount.

Your guarantors may also be contacted for repayment.

5. What is the interest rate on a MUDRA loan?

Interest rates in MUDRA loans vary from bank to bank, so you can get this information on the official website of your bank of choice.

6. Do MUDRA loans have security?

MUDRA loans are given without any form of security or collateral.

7. Can a person take two(2) MUDRA loans?

No, you can’t take two MUDRA loans. The reason is that once you apply for a MUDRA loan it would be updated in your credit report.

Also before you can get another loan, your credit record will be checked and the lender is likely not going to approve it.

If you need extra cash you can just talk to your lender for a loan top-up.

8. How long does it take for a MUDRA loan to be disbursed?

If your loan is approved, it could take approximately 2 days for the money to be disbursed.

9. Who is eligible for MUDRA?

If you are an Indian citizen and you have a business plan for a non-farm income-generating activity such as trading, processing, etc, then you are eligible for a loan.

10. Is it easy to get MUDRA loans?

As long as you have met the requirements, the whole process just takes 7-0 working days.

11. What are the requirements for MUDRA loans?

Asides from the documents required, you should have a good credit track record.

12. How can I repay my MUDRA loan?

Term loans can be repaid in installments while OD & CC limits are repayable on demand.

13. Is ITR compulsory for a MUDRA loan?

When applying for a loan, your income determines your loan amount. So yes, ITR is required if you want a MUDRA loan.  

14. How can I check my MUDRA loan status online?

As of now, there is no method of tracking your application online.

15. Is a current account necessary for a MUDRA loan?

No, you don’t need to apply for a loan in the bank where you have an account.

16. Where can I complain about MUDRA loans?

Customers can report their complaints by sending a mail to

17. What are the Mudra Toll-free numbers?

State Toll-Free Numbers for PMMY
ANDHRA PRADESH 18004251525
ASSAM 18003453988
BIHAR 18003456195
CHANDIGARH 18001804383
CHHATTISGARH 18002334358
DADRA & NAGAR HAVELI 18002338944
DAMAN & DIU 18002338944
GOA 18002333202
GUJARAT 18002338944
HARYANA 18001802222
JAMMU & KASHMIR 18001807087
JHARKHAND 1800 3456 576
KARNATAKA 180042597777
KERALA 180042511222
LAKSHADWEEP 0484-2369090
MADHYA PRADESH 18002334035
MAHARASHTRA 18001022636
MANIPUR 18003453988
MEGHALAYA 18003453988
MIZORAM 18003453988
NAGALAND 18003453988
NCT OF DELHI 18001800124
ORISSA 18003456551
PUDUCHERRY 18004250016
PUNJAB 18001802222
RAJASTHAN 18001806546
SIKKIM 18003453988
TAMIL NADU 18004251646
TELANGANA 18004258933
TRIPURA 18003453344
UTTAR PRADESH 18001027788
UTTARAKHAND 18001804167
WEST BENGAL 18003453344

National Toll-Free Number
1800 180 1111

1800 11 0001

By Kapil Garg

I am a professional Loan and Insurance advisor with an approved license helping people with my services like Loans, Retirement Planning, Investment Planning.

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