mudra loan

Title: Everything You Should Know About Pradhan Mantri Mudra Yojana

Meta Description- Pradhan Mantri Mudra Yojana (PMMY), also known as mudra loan, is a scheme launched by the Government of India. The following article will explain Pradhan Mantri Mudra Yojana (PMMY) in detail.

Introduction

The Scheme was launched at Vigyan Bhawan, New Delhi, on April 8, 2015, by Prime Minister Shri Narendra Modi to provide funds to non-corporate small businesses outside the ambit of other credit facilities. The Mudra loan has proved to be way too helpful to the Indians.

The PMMY is an initiative by the Department of Financial Services (DFS), the Ministry of Finance, and the Government of India. The Scheme was launched at Vigyan Bhawan, New Delhi, on April 8, 2015, by Prime Minister Shri Narendra Modi to provide funds to non-corporate small businesses outside the ambit of other credit facilities.

Objective

The objective of PMMY is to enhance the credit flow to the MSME sector by providing refinance support at reasonable rates of interest. PMMY is an initiative to provide funding to micro-entrepreneurs in all sectors through Banks and NBFCs.

The applicant should be a citizen of India and fulfill the eligibility criteria specified by SIDBI. The applicant must have any sort of business in the non-farming sector. The activities should be in the manufacturing, trading, service, or processing sectors. Moreover, the credit needs to be up to 10 Lakh rupees. For the same, they can approach an MFI, Bank, or NBFC.

As per recent data released by SIDBI during FY 2016-17, around Rs 1.64 lakh crore has been disbursed under this scheme so far, with an average ticket size of Rs 1.23 lakhs per loan sanctioned under the PMMY scheme across all sectors.

Mudra Loan Eligibility

Let us now look at how you would be able to apply for the Mudra Loan. MUDRA loans are meant for small businesses. The scheme’s objective is to provide funding to non-corporate small businesses, promote entrepreneurship, enhance financial inclusion and create jobs.

Under PMMY, MUDRA provides loans that range from Rs 50,000 to Rs 1 Crore at an interest rate between 6.5% – 9%.

Who can apply for a MUDRA loan?

Citizens who belong to India are thinking of starting a business in a non-farm sector and generating income through manufacturing, trading, processing, or service sectors. Along with that, the credit need for the same should be less than Rs. 10 Lakh. If these conditions are fulfilled, the person can approach either MFI, Bank, or NBFC to avail of the Mudra Loan under the Pradhan Mantri Mudra Yojana.

Types of Loans

We will now be looking at the types of loans provided under the Pradhan Mantri Mudra Yojana (PMMY). The loans provided under the same are of three types. These are as follows-

Shishu- This category covers loans up to Rs. 50K.
Kishor- This category covers loans between 50K and 5 Lakh INR.
Tarun- This category covers loans between 5 Lakh and 10 Lakh INR.

These types have been named Shishu, Kishor, and Tarun. The main reason behind these types of development is that the growth and development are different for different types of business.

The initiatives will be rolled out in phases over the next three years (2019-2022), with an estimated outlay of Rs 8 billion. The first phase will focus on creating an enabling environment for MSMEs through policy interventions, creating awareness among stakeholders, and providing technical support by apprising them of the various schemes available from different government departments.

The second phase will create a healthy ecosystem for MSMEs by creating clusters, improving access to finance, infrastructure development, etc. The third phase will promote innovation in MSMEs through knowledge-sharing platforms, incubation centers, etc.

PMMY is a product of the Government of India and is being implemented by the National Housing Bank. The PMMY has been designed to provide a holistic solution to home buyers regarding financing, construction, and post-construction support. It provides for interest subsidy up to 4% per annum on the principal loan amount for first-time home buyers. In addition, it also provides for capital subsidy under specific schemes like Pradhan Mantri Awas Yojana (Urban) and Pradhan Mantri Awas Yojana – Gramin (Rural).

It must be noted that no subsidy would be granted when a loan is taken under Mudra Loan. But there is one condition. In case the loan proposal is linked with some other government scheme where the Government would be providing the capital subsidy. That particular loan proposal would also be eligible for the Pradhan Mantri Mudra Yojana (PMMY). The guidelines mentioned under the Mudra Loan say that there is no subsidy to be provided for a loan under this category.

Several schemes provide capital subsidies to farmers. If your project falls into one of these schemes and you want to avail a loan through the PMMY portal, you will get a capital subsidy and interest subsidy on your loan amount.

Conclusion

If you also want to get assistance under the Pradhan Mantri Mudra Yojana (PMMY), you can go to the local bank and get advice from any financial institutions in the region where they live. Eg. Commercial Banks, Regional Rural Banks (RRBs), Micro Finance Institutions (MFIs), Non-banking financial companies (NBFCs), etc.

Suppose the borrower is a woman entrepreneur or belongs to SC (Scheduled Caste) or ST (Scheduled Tribe) category. In that case, she will get additional benefits such as concessional interest rates and priority in processing applications.

FAQs

Q1. What is PMMY?

A1. Pradhan Mantri Mudra Yojana (PMMY), also known as mudra loan, is a scheme launched by the Government of India. The main aim of the same is to provide funds to the people who do not have any. Along with that, it would be able to extend credit to the people.

Q2. What is the aim of PMMY?

A2. It aims to provide financial assistance to borrowers who wish to expand their business or start a new venture. PMMY is an initiative to provide funding to micro-entrepreneurs in all sectors through Banks and NBFCs.

Q3. What are the interventions in the scheme?

A3. These types have been named Shishu, Kishor, and Tarun. The main reason behind these types of development is that the growth and development are different for different types of business.

Q4. Is subsidy required for the same?

A4. It must be noted that no subsidy would be granted when a loan is taken under Mudra Loan.

Q5. Explain Mudra loan eligibility.

MUDRA loans are meant for small businesses. The scheme’s objective is to provide funding to non-corporate small businesses, promote entrepreneurship, enhance financial inclusion and create jobs.

Under PMMY, MUDRA provides loans that range from Rs 50,000 to Rs 1 Crore at an interest rate between 6.5% – 9%.