There are many small organizations and enterprises in India. All these units are collectively referred to as “micro units.” It has been observed that these micro units are many a time short of funds. If these funds would have been provided to them, they could have performed much better than what they are giving today. This thought is the origin of the scheme- Mudra Bank Loan Scheme. Who can apply for the Business Loan under Pradhan Matntri Mudra Yojana Scheme? What is the step-by-step process of applying a loan under the Mudra Yojana Scheme?
Introduction about Mudra Yojana Scheme
If you are already familiar, you can skip this section.
The scheme was initiated by Mr. Narendra Modi last year. The main aim of this scheme is to provide easy loans to the small entrepreneurs of India. MUDRA refers to is Micro Units Development Refinance Agency. Any Indian citizen who aspires to launch a new business or extend his old business in a non-farm sector for the purpose of generation of income, such as manufacturing, processing, trading or service sector and needs a loan of up to Rs.10 Lakhs can use this scheme to avail the loans. The individuals can approach a bank, MFI (Micro Finance Institution) or NBFC for availing collateral free loans under Pradhan Mantri Mudra Yojana (PMMY).
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How the Micro Units are categorized?
The micro units have been categorized into three stages according to their growth, development and funding requirements.
Shishu (child) Category
As the name indicates, this category is for the start-up businesses. All those enterprises that have been set up currently and are in their initial stages and seeking for loans will fall under this category. A maximum of Rs. 50,000 loan cover will be provided to such industries. Some of the important features of Shishu category are no collateral is required, no loan processing fees, repayment up to 5 years and working loans can be taken through Mudra cards.
This category is for those units that have already been started but needs to be established properly. An amount ranging from Rs. 50,000 to 5,00,000 will be provided to the units falling in this category.
The micro units that have been initiated and established will fall under this category. The loans provided to them are for the expansion and betterment of their units. They can avail the loan up to Rs. 10,00,000.
Which are the Financial Institutions that can offer such loans?
There are few criteria set by the Indian Government regarding the loan offerings by the financial institutions.
- All scheduled commercial and regional rural banks in public and private sector that possess all these underlined features can lend a loan to the micro units-
- A track record of three consecutive years of profit
- Net NPA not exceeding 3%
- CRAR not less than 9%
- Not carrying any accumulated losses
- MFI and small business companies can also lend a loan if they fulfill all the requirements of the government.
What is the process for applying for the loan under this Mudra Yojana Scheme?
Here is the detailed and step-by-step process for applying to the PMMY.
#1 First of all, the borrower needs to judge the stage of his business in which it is running currently, i.e. shishu, Kishor or Tarun.
#2 If the business is in its initial stage, i.e. shishu stage, you have to prepare a business idea and present it along with the loan application form to the bank from which you wish to get your loan sanctioned.
#3 You need to provide your identity proof, proof of address and recent passport size photographs along with the form.
#4 Comply with all the formalities as per the instructions of the bank.
#5 If the bank authorities are satisfied with the documents provided, your loan will be sanctioned.
#6 The applicant should not be the defaulter of any financial institution or NBFC to avail the loan under Shishu category.
#7 The interest rates on loan will be 1% per month, i.e. 12% per annum.
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What are the documentations required to be submitted to avail loan under this scheme?
- Self-attested Proof of Identity. You can submit Voter ID or Driving license or Aadhar card or Passport etc.,
- Proof of Residence which can be any of telephone bill, electricity bill, Voter Id, Aadhar card, Bank statement, Passport etc.
- Recent Photographs
- Quotation of Machinery or any other items to be purchased.
- Name and details of suppliers of the machinery who is supplying or who had supplied.
- Proof of Identity of business.
Below given is the application form for applying loan under this scheme. Click this form to open.
Mudra Yojana loan application form
Conclusion: The government of India is infusing every effort to promote the micro units. In this aspiration, they have launched this MUDRA scheme of easy loans in order to provide financial support for the growth and development of these micro units. If you have a small business and such loans would be useful to expand your business.
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How to apply a business loan under Pradhan Mantri Mudra Yojana Scheme
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