The Pradhan Mantri MUDRA Yojana (PMMY) is a scheme announced by the Union Government of India on April 8, 2015. The purpose of PMMY is to provide funding to the non-corporate small business sector. Non- Corporate Small Business Segment (NCSBS) consists of millions of proprietorship/ partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits/ vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.
For implementing the Scheme, the government has set up a new institution named, MUDRA (Micro Units Development & Refinance Agency Ltd.), for development and refinancing activities relating to micro units, in addition to acting as a regulator for the microfinance sector, in general. MUDRA provides refinance to all banks seeking refinancing of small business loans given under PMMY. Thus, MUDRA refinances all Last Mile Financiers – Non-Banking Finance Companies of various types engaged in financing of small business, Societies, Trusts, Section 8 Companies [formerly section 25], Co-operative Societies, Small Banks, Scheduled Commercial Banks and Regional Rural Banks – which are in the business of lending to Micro/Small business entities engaged in manufacturing, trading and services activities.
Eligibility Criteria for Pradhan Mantri Mudra Yojana (Mudra Bank Loan)
- Indian citizens
- Non-farm income generating activities
- Non-corporate entities
- Funds to be invested for business activities
- Small business owners like truck operators, vegetable vendors, shopkeepers, fruit vendors, repair shops, artisans, paper/food processing units etc. are all eligible for Mudra loan
- The age of the applicant should be 23 years to 28 years at the time of the loan sanction and should not be more than 65 years at the time of the loan maturity
- The applicant should have a monthly income above INR 17000 or INR 15 lakhs or more as annual turnover. The minimum profit after tax for non-individuals should be INR 1 lakh per year and for proprietorship/self-employed, it is INR 2 lakhs
- In case of salaried individuals, the minimum occupational stability should be 2 years and business stability should be at least 5 years, with 3 years’ service stability for doctors
- Applicants either have to have spent a year in the current residence or have a 1-year service relationship with the bank through which they are applying for the loan.
Categories of Pradhan Mantri Mudra Yojana
The micro-units are further classified based on their growth stage, development and funding requirements. The three categories are as follows:
- Shishu (child) Category:
This category is for the start-ups that have just started out and are looking for a loan. Loan cover offered to this category of micro-units is Rs.50,000.
- Kishor Category:
This is the category where the business has started but it is yet to be established. The loan cover offered to this category ranges from Rs.50,000 to Rs.5 lakh.
- Tarun Category:
The business that has started and established themselves fall under this category. The loan might be to expand their business or to buy assets, etc. The loan cover offered to this category ranges from Rs.5 lakh to Rs.10 lakh.
Documents required for Mudra Loan
If the borrower wishes to take a vehicle loan under the Pradhan Mantri Mudra Yojana (Mudra Loan), he must submit the following documents:
- The Pradhan Mantri Mudra Yojana application form that is duly filled.
- The vehicle loan application form that is duly filled.
- 2 passports sized photos of the borrower.
- Photo identity proof and address proof and income proof.
- Last 6 month’s bank statement.
If the borrower wishes to take a business instalment loan under the Pradhan Mantri Mudra Yojana, he must submit the following documents:
- Pradhan Mantri Mudra Yojana application form and Business Instalment loan application form that is duly filled.
- Photo identity proof and address proof.
- Proof of establishment.
- Last 6 month’s bank statement.
- Ownership proof or office and residence.
- Proof of continuity of business.
- Qualification proof.
- Trade references.
If the borrower wishes to take a Business Loans group and rural business credit under the Pradhan Mantri Mudra Yojana, he must submit the following documents:
- Pradhan Mantri Mudra Yojana application form and Business Instalment loan or Rural Business Credit application form that is duly filled.
- Photo identity proof, age proof, and address proof.
- Ownership proof of residence or office.
- Business vintage proof.
- Last 12 month’s bank statement.
- Last 2 years Income Tax Return document.