Elementary Knowledge of Mudra Loan
Micro Units Development and Refinance Agency (which is MUDRA full form) Loan scheme under Pradhan Mantri Mudra Yojana (PMMY) is an initiative by Government of India that offers loans to individuals, SMEs and MSMEs. MUDRA loan is offered under 3 loan schemes named as Shishu, Kishor, and Tarun. The maximum loan amount offered under MUDRA scheme is up to Rs. 10 lakh, whereas there is no minimum loan amount criteria. No collateral or security is required by banks or financial institutions to avail Mudra loan. The repayment tenure of Mudra loan ranges from 3 years to 5 years with flexible EMI options.
The largest economic sector of the country after agriculture comprises of non-corporate micro enterprises generating the bulk of the employment opportunities estimated to be approximately ten crores impacting the life of 50 crore Indians. They are mainly engaged in manufacturing, trading, processing and services, and the enterprises are broadly classified as proprietary or Own Account Enterprises (OAE). Understandably, this sector is deemed to be the economic bulwark of the country, yet it is reckoned to be the largest disorganised business eco-systems in the world. The NSSO survey of 2013 places the OAE at 5.77 crore units, which lie out of the ambit of the formal financial sector enjoying no credit facilities whatsoever. The MUDRA scheme under the aegis of the PMMY aims to be this huge sector into the fold of institutional credit, transforming them into a potent instrument of employment and GDP growth.
Mudra Loan offered
Products offered under Mudra Scheme are classified under 3 loan schemes named as Shishu, Kishor and Tarun. Below mentioned is the loan amount offered under each loan scheme:
- SHISHU Loan: Loans up to Rs. 50,000 (For start-ups and new businesses)
- KISHOR Loan: Loans from Rs. 50,001 to Rs. 5,00,000 (For buying equipment/machinery, raw materials, business expansion for existing enterprises)
- TARUN Loan: Loans from Rs. 500,001 to Rs. 10,00,000 (For established businesses and enterprises)
Benefits of Mudra Loan
- Mudra scheme is are covered under Credit Guarantee Schemes from Govt. of India
- Mudra loans are majorly offered to shopkeepers, traders, vendors, and MSMEs engaged in manufacturing, trading and service sector activities
- All Non-farm enterprises, i.e. small or micro firms engaged in the income generating activities can avail Mudra loan
- Availed loan amount can also be used as term loans and overdraft facilities
- Mudra scheme can be availed via Mudra cards, as well.
- Service Sector Activities: Starting businesses of salons, gyms, tailoring shops, medicine shops, repair shops, and dry cleaning and photocopying shops, etc.
- Commercial Vehicle: Purchase of commercial transport vehicles like tractors, auto-rickshaws, taxis, trollies, tillers, goods transports vehicles, 3-wheelers, e-rickshaws, etc.
- Business activities for Traders and Shopkeepers: Setting up shops, service enterprises, trading and business activities and non-farm income generating activities
- Food and Textile Product Sector Activities: Various activities involved in respective sector
- Agri-allied Activities: Activities related to businesses in agri-clinics and agribusiness centres, food & agro-processing units, poultry, pisciculture, bee keeping, sorting, livestock-rearing, grading, aggregation agro industries, diary, fishery, etc.
- Equipment Finance Scheme for Micro Units: Maximum loan up to Rs. 10 lakh