Pradhan Mantri MUDRA Yojana (PMMY) – MUDRA Scheme

Pradhan Mantri MUDRA Yojana: Here we have collected all important information about the Pradhan Mantri MUDRA Yojana and MUDRA Bank. The outlay of the scheme and the product types.

Pradhan Mantri MUDRA Yojana (PMMY) – MUDRA Scheme

Definition: Pradhan Mantri Mudra Yojana (PMMY) is a scheme to extend collateral free loans

  • by Banks, Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs)  
  • to Small/Micro business enterprises and individuals in the non-agricultural sector
  • to enable them to setup or expand their business activities and to generate self employment.
  • Maximum limit of loan is Rs 10 lakh.

Launch Date: April 08, 2015. It was announced in the Annual Budget for FY16.

MUDRA: stands for Micro Units Development & Refinance Agency Ltd.

About MUDRA Bank

MUDRA Bank is proposed to be set up through enactment of a law which will take some time. So it was started as a subsidiary of Small Industries Development Bank of India (SIDBI). It was launched on 8 April 2015. On 6 January 2016, it was converted as a wholly owned subsidiary of SIDBI and renamed as MUDRA (SIDBI) Bank.

How does MUDRA Bank offers loan

MUDRA is a refinancing Institution. MUDRA do not lend directly to the micro entrepreneurs / individuals. Mudra loans under Pradhan Mantri Mudra Yojana (PMMY) can be availed of from nearby branch office of a bank, NBFC, MFIs etc.

MUDRA Portal: Borrowers can also now file online application for MUDRA loans on Mudramitra portal (www.mudramitra.in).

Chairman of MUDRA: Shri Mohammad Mustafa.

Outlay: Rs 20,000 Crore (Provided by RBI)

Explanation in simple terms

Pradhan Mantri Mudra Yojana is the name of the scheme to provide loan to the Non–Corporate Small Business Sector (NCSB). For implementation of this scheme, MUDRA Bank was proposed to be set up. But that requires enactment of a law. So MUDRA Bank was started as a subsidiary of SIDBI under the name MUDRA (SIDBI) Bank. Now MUDRA Bank is working by refinancing loans through other banks.

Products/Schemes under MUDRA Yojana

Mudra Yojana offers three type of product namely Shishu, Kishor and Tarun.

  • Shishu : covering loans upto  50,000/-  (Single page application form for this product) 
  • Kishor : covering loans above  50,000/- and upto 5 lakh
  • Tarun : covering loans above  5 lakh and upto 10 lakh

Who can give loans under Mudra Yojana?

  • Scheduled Commercial Banks
    • Public Sector Banks
    • Private Sector Banks
    • Regional Rural Banks 
    • Small Finance Banks
    • Co-operative Banks
  • Micro Finance Institutions – It can give loans only upto Rs 1 lakh (through Micro Credit Scheme)
  • Non-Banking Finance Companies

Purpose of MUDRA loan

  • For purchase of Transport Vehicle
  • For Community, Social & Personal Service Activities- like Saloons, beauty parlours, gymnasium, boutiques, tailoring shops etc.
  • Food Products Sector- Activities such as papad making, achaar making, jam / jelly making, agricultural produce preservation at rural level etc
  • Textile Products Sector / Activity
  • Business loans for Traders and Shopkeepers
  • Activities allied to agriculture-, e.g. pisciculture, bee keeping, poultry, livestock, rearing etc

MUDRA Card

  • MUDRA Card is an innovative product which provides working capital facility as a cash credit arrangement.
  • MUDRA Card is a debit card issued against the MUDRA loan account, for working capital portion of the loan.
  • National Payment Corporation of India (NPCI) has given RuPay branding to MUDRA Card and also separate BIN / IIN for the same, by which credit history can be tracked.

Credit Guarantee Fund for MURDRA Loans

  • Credit Guarantee Fund for MUDRA loans was formed with an outlay of Rs 3000 crore. As MUDRA is a collateral free loan hence to mitigate the issue of collaterals, MUDRA is offering a Credit Guarantee Product. 
  • The Scheme is being managed by National Credit Guarantee Trustee Company Ltd. [NCGTC], an agency promoted by the GOI.

Interest Rate under MUDRA Yojana: Interest Rate is de-regulated and can be decided by the bank giving the loan.

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