A Complete Guide To PM Mudra Yojna

A Complete Guide

MSME sector which comprises the micro, small and medium businesses in India faces a lot of challenges in raising funds and getting the financial investments for their business though these small and medium businesses provide employment to over 12 crore people.

So, ventures take loans from informal sources increasing their operating cost and ultimately undermining the company’s operations.

To support the MSME sector, In 2015, The Pradhan Mantri Mudra Loan Scheme, a flagship program of India was started by Prime Minister Narendra Modi.

Qualified Entrepreneurs or businesses can avail the loan of nearly Rs10 lakhs. Under this scheme, the businesses do not have to pay any processing charges and they must repay the loan in EMI in a period of 5 years.

Under the PM Mudra Loan Yojana, a citizen of India is issued a Mudra card so that they can apply for the loan.

About PM Mudra Yojana

The Pradhan Mantri Mudra Yojana (PMMY) is the prime program initiated by the Government of India to facilitate low-cost financing for small and micro-businesses.

The minor, small, or non-agriculture businesses engaged in the creation of wages via trading, manufacturing, or an essential service provider can apply for credit under the PMMY scheme. In addition, cooperative agricultural operational businesses are also eligible for these loans. 

This Mudra Yojana Loan allows businesses to work, develop, and grow their establishments that are no more stressed out with the financial pressure and can focus on the daily work schedules. The PMMY scheme offers three main Products namely:

1. Shishu Loan

The Shishu loan enables the entrepreneurs to set up a business with a loan of Rs 50,000/-. The following documents are required for availing this loan:

The quotation for the equipment and any additional goods being bought that may be required.

The complete details of the machinery and equipment that has been acquired.

The details of the company which supplies the machinery and equipment.

2. Kishore Loan

The range of Kishore Loan is between Rs. 50,000 and Rs5,00,000. This is a wonderful range for entrepreneurs who need extra financial resources to develop and grow their businesses . The following documents are required for availing this loan :

Balance sheet of the company for last two financial years

Sales tax and income tax returns.

Statements of bank account for last six months.

Projected balance sheet for the upcoming year or the loan term you are looking for.

Copy of Memorandum of Association and Articles of Association in the case if it is applicable.

The applicant’s detailed business report examining the technical and economic viability.

3. Tarun Loan

Tarun Loan ranges between Rs 5000 to 10,000 under the PMMY program. In Addition to , the papers required for the Kishore Loan, the entrepreneur must provide the following papers as well:

Address Proof, which may include a Residence certificate, Electricity bill, Water Bill, Aadhar card, or document issued by the government.

Identification Proof, which may include Driving License, Voter ID, passport, PAN Card, or Bank Passbook.

Photographs

Certificate of SC, ST, or OBC in the case it may apply.

Fees for Mudra Loans with Interest Rates

Interest Rates

The interest rate of Mudra Loan is decided based on the assessment of the lending institution and background of the applicant, and their business requirements.

Loan Processing Fees

For Mudra Loan up to Rs 50,000, there are no processing fees. However, GST, 10 % interest rate and 0.50 % processing charges are applicable amounts between Rs. 50,001 and Rs 10,000,000.

Eligibility Criteria For Procuring: PM MUDRA YOJANA LOAN

The loan of Mudra Yojana is available for urban and rural India’s non-farming micro, medium and small businesses and non-corporates.

For example, a person who is a shopkeeper, agricultural individual, vegetable or fruits vendor, or small manufacturer is eligible for the PMMY loan. 

The following institutions are offering Mudra Loans:

• Private and Public sector banks.

• Small Finance Banks.

• Non-banking Financial Companies.

• Regional Rural Banks.

Process Of Mudra Credit

There are around 29 banks registered under the PMMY scheme. You can contact any of the banks for the loan under the scheme and all the other details are mentioned below :

• Contact your nearest private bank or commercial bank, which is listed.

• Summarize your company’s plan or strategy.

• Formulate the completed credit application and submit the framework of the same.

• Further papers are required as a part of identity confirmation, verification proof of organization address, proof of address, reports of assets, organization character evidence, IT returns, and other detailed information needed by the financial institutions.

• Finish the complete process based on the requirements by the Bank.

Once the required documents are submitted, the verification process will start , and the credit will be allowed accordingly.

Purpose Of Mudra Loan With Advantages

India’s economy has grown with the tremendous contribution of Micro, Small, and Medium Enterprises, which play a crucial role in providing employment to the people of the country.

Their contribution to the development of the country is huge and keeping in mind the Government has launched the PMMY Scheme.

The Mudra Loan scheme has several advantages which can help you to achieve great heights in your business.

The primary benefit of PM Mudra Loan is that it offers loans without security and can be invested to develop and grow your business.

Mudra Loans have an excellent value as they provide some support to the young start ups. The loan is provided at very nominal interest rates.

You can withdraw the authorized loan amount anytime with the Mudra Loan card.