Under the Pradhan Mantri MUDRA Yojana, the Micro Units Development and Refinance Agency (MUDRA) is a refinancing agency (PMMY). On April 8, 2015, Prime Minister Narendra Modi introduced the PMMY program to foster an entrepreneurial culture based on values.
Loans of up to Rs 10 lakh are given to non-farm small/micro firms and non-corporates under the PMMY plan to help them generate revenue and create jobs in the manufacturing, retail, service, and allied agricultural industries. These are referred to as Mudra Loans. MUDRA is a refinancing institution, however, it does not offer loan services to the borrowers directly. As an alternative, borrowers can obtain Mudra Loans through nearby branch offices of any bank, NBFC, MFI, etc. Additionally, borrowers can apply online to receive Mudra benefits.
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The Mudra system provides loans to micro, small, and medium-sized businesses in rural and urban India that are neither corporations nor farming businesses. You qualify for the PMMY program if you are:
- a modest producer
- a craftsman
- a market vendor for fresh produce
- a store owner
- a person working in agriculture (poultry, fisheries, livestock units, etc.)
The detailed Mudra loan eligibility is shown below:
- lowest age
18 years
- greatest age
65 years
- Who may apply for a loan?
Both new and existing MSME entities are eligible for loans.
- Collateral
No security from a third party or collateral is necessary.
- Suitable Lending Organizations
Regional rural banks, public sector banks, private sector banks, and microfinance organizations
- Documents
Application form, identity, and residency documentation, passport-size pictures
To qualify for a Mudra loan, the applicant must be at least 18 years old and no older than 65. Non-farm income-generating enterprises in the commerce, service and industrial sectors are eligible for Mudra loans. Furthermore, the credit requirement must be 10 lakh rupees or less.
Lending InstitutionsMudra Loans eligibility
An application for a MUDRA (Micro Units Development and Refinance Agency) loan can be made by anybody who owns a business. The Mudra loan is intended to help small and medium-sized firms who lack access to a formal conduit for obtaining money. All regional rural banks, both public and commercial, are qualified to offer Mudra Loans. The financial organizations that provide Mudra loans are listed below:
- Non-Bank Financial Institutions (NBFC)
- Banks in the Public and Private Sector
- Micro Finance Companies (MFI)
- Rural regional banks (RRB)
- Banks with Small Finances (SFB)
To qualify for a MUDRA Loan, the lending institution must also make sure that the borrower meets the requirements. These are what they are:
- The bank must have made money.
- For the bank to be qualified, the previous two years had to be profitable.
- The net performing assets for public, private, and regional rural banks shall not exceed 15%, 10%, and 6%, respectively.
For commercial and public sector banks, the lending institution’s net value must exceed 250 crores, while it must exceed 50 crores for rural banks. The banks chosen for Mudra loans include 4 cooperative banks, 36 microfinance institutions, 27 public sector banks, 31 regional rural banks, and 17 private sector banks.
Conclusion
Loans under the Mudra program are especially offered to meet the needs of start-ups and budding enterprises. Mudra loans are unsecured, meaning you can apply for one without providing any security or collateral. Mudra interest rate for business loan vary based on the lenders. The Mudra Loans, generally is offered at an interest rate starting at 1% per month. However, it relies on several variables, including eligibility, loan amount, and duration. The maximum loan amount is Rs. 10 lakh, with a 5-year payback period. Mudra Loans are available in several categories, including merchant cash advances, lines of credit, invoice finance, and working capital loans.
