Pradhan Mantri Mudra Yojana: Process, Benefits & Eligibility


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Pradhan Mantri Mudra Yojana, known as the PMMY scheme, provides loans of up to 10 lakhs for small and micro enterprises. It is one of the popular schemes that the Government of India has initiated to provide financial support to promising individuals for setting up and expanding their businesses.  Mudra schemes are started to include the enterprises that are left out due to lack of funds so that they can begin manufacturing, trading, and delivering services. Including workers in the mainstream will strengthen livelihood opportunities even in the rural sectors, and the influx of people going to cities will be minimized to an extent.

What is Pradhan Mantri Mudra Yojna?

The Pradhan Mantri Mudra Yojna was launched by the Prime Minister of India in April 2015. The scheme targets financially disadvantaged small and micro enterprises, with a special focus on the informal sector. The government provides loans through the many financial institutions across the country.

Selected Financial Institutions for Loan Disbursement

Public Sector Banks 21
Regional Rural banks 36
Private Sector Banks 18
Non-Banking Financial Company (NBFC) 35
Micro Finance Instituions (MFI) 25
Co-Operative Banks 15
Small Finance Banks 6

Objectives of Pradhan Mantri Mudra Yojana

Sustainable Growth

The government’s vision was to enable small businesses to grow by giving them the required financial help. Through the scheme, they can create more businesses while creating jobs for others in the neighbourhood and strengthening the economy.

‘Including’ the informal economy in the mainstream

The growing economy can flourish when the informal sector, which has been left out, becomes its tax base, as up till now, this sector was non-taxed

Financial Inclusion

The country has a well-developed banking sector, even in far-flung areas. Now, the scheme is making it easier for individuals to financially associate themselves, unlike before, when the marginalized section couldn’t develop any need to go to a bank mainly because of their lack of money and limited area of work.

Creating Entrepreneurs

The scheme is helping visionary people to upscale their businesses and become self-employed. They are realizing how an entrepreneur can employ others and create a healthy well-being for society and reduce unemployment.

Benefits of Pradhan Mantri Mudra Yojana

The scheme’s popularity is rightly because of the benefits that small business entrepreneurs experience.

Flexible Loan Amount

Flexible loan categories cater to people’s different needs as per their business stage.

Access to Finance

People can get much-needed financial help in the form of affordable credit, which they can use to start or expand their businesses, as per the available requirements.

Affordable Interest Rates

The interest rates are affordable as the scheme is designed to minimise borrowers’ financial burden.

No Collateral Security

Unlike most loans, this one is special since it doesn’t require collateral security.

Types of Loans

There are three types of loans to fund the needs of micro units per the available requirements.

Shishu: One can avail a loan of up to 50,000

Kishore: Loans between 50,000 and up to 5 laks are disbursed

Tarun: Loans between Rs. 5 lakh and Rs. 10 Lakh is given

Fees and Charges

The banks designated to provide MUDRA loans have specific upfront charging fees per their guidelines. However, they waive the upfront fees for loans under the Shishu category.

Also Read: PM Vishwakarma Scheme All Details, Benefits, Application Form

Pradhan Mantri Mudra Loan Documents

  • Adhaar Card, Driving License, Passport, Voter ID card, PAN card, Class X certificate, Birth certificate,  Electricity Bill or Water bill.
  • The application form for Mudra is in PDF format, and a passport-size photograph is attached.
  • A bank statement for the previous 12 months is compulsory to authenticate the income.
  • Proof of SC/ST or OBS, wherever applicable.
  • ITR from the previous year, if applicable.

Eligibility Criteria for obtaining Pradhan Mantri Mudra Yojana

The scheme is available to individuals/enterprises.

Small Business Owners

Individuals dealing with small businesses in manufacturing, trading, or doing similar services can apply for loans.

Micro Enterprises

Micro enterprises that are working towards generating income, such as artisans, vendors, and shopkeepers, can apply too. They are also categorized as non-corporate small business sectors.

Sector Types of Activities
Textile Sector– Helping the micro textile industries to increase the production of garments and other products such as mattresses, rugs, carpets, soft furnishings, etc.

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Mechanical and computerized stitching in a series of products (both garment and non-garment)

Production from Powerloom and Handloom industry

Handwork industry where Chinkankaari, dyeing, and printing along with knitting

Micro Industries deals with automobile and furnishing accessories

Land Transport Sector:- Loans given to people looking to make a living for themselves after business transport vehicles Commercial cars meant to transport passengers

Auto-rickshaws and currently the  huge popularity of E-rickshaws

Small goods carrying transport vehicles

Food Product Sector – Financial Assistance to small-scale food industries Manufacturing jams, pickles, papads

Manufacturing of Baking products

Catering services

Small-time food services dealing with the production of snacks along with sweet shops

Service Sector – Community services Tailoring shops, boutiques, hair and beauty salons, dry cleaning services

Vehicles repairing centre

Gym and medical shops

How to Apply for PMMY?

There are the following steps to apply online for Pradhan Mantri Mudra Yojana:

  • Visit the official website and select the Udyamimitra portal. Choose ‘Mudra Loan Apply Now
  • Fill in the details correctly by completing personal and professional information and authenticating your identity with the OTP.
Borrowers can visit the allotted financial institutions in the scheme. They can also fill out a Mudra loan application by visiting the UdyamMitra portal – www.udyamimitra.in

Final Thoughts

The Pradhan Mantri Mudra Yojana has strategically promoted financial inclusion while supporting small and micro industries. Many aspiring entrepreneurs can now apply for similar schemes per their requirements and create a pleasant situation for themselves.


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