Pradhan Mantri Mudra Yojana

July 25, 2017 | By Jagjit Singh | Filed in: Centre, Government Schemes, News & Updates, State Government, Yojana.

Pradhan Mantri Mudra Yojana was launched in March 2015. The Mudra Loan under it is a Government of India undertaking designed to meet the financial needs of non-corporate small business units of the country. The idea is to provide financial support for small business which employs the majority of the Indian working population.


Details of the Mudra Loan

The government has come up with a 3-tier system which varies depending on the size and stage of the business.

As you can see below, the three tiers explained

SHISHU: It is the Loan giving financial support of up to INR 50,000

Kishore: It is the Loan giving financial support of amount ranging between INR 50,000 and INR 500,000

Tarun: It is the loan giving financial support of amount ranging between INR 500,000 and INR 10, 00,000.

Shishu loan is for those who are newcomers or basically start-ups, Kishor is for the establishment of businesses which have already started while Tarun is for the expansion of businesses which are established otherwise.

Eligibility Criteria for Mudra Loan for Applicants and Loaners

Under the Pradhan Mantri, Mudra Yojana launched under Micro Units Development and Refinancing Agency, the eligibility criteria are as given below.

Micro business (not farming) generating income can apply for the aid of INR 10 lakh or below.

The participating banks that are willing to give mudra loan

  • Public Sector Banks,
  • Public Sector Banks,
  • State Co-operative Banks,
  • Micro Finance Institutions,
  • Non-Banking Financial Companies and Regional Rural Banks

Eligibility criteria for these banks

  • They must have profit records for 3 years straight.
  • They should have NPAs less than 3% or 3%.
  • CRAR of at least 9% should be present.
  • 100 crores net worth

These requirements are necessary for the banks and nonbanking companies to offer mudra loan to anyone.

Method for Taking out a Mudra Loan

  1. Firstly, find the nearest bank offering the loan and visit it with your business plan.
  2. Business plan, identity proof, address proof and passport photographs are required to submit the loan application.
  3. After all the documentations are done, the bank will review and then approve the plan accordingly.
  4. After approval, the loan will be sanctioned.

Aim of Mudra

The main aim of the Mudra loan under the Mudra scheme is the basic financial assistance of non-corporate small businesses.

A lot of schemes are being initiated by the government of India to provide financial as well as technical assistance to the startups and small businesses. The micro sector is neglected and needs major attention. Mudra is a way to support such micro sector activities going on in the country. Artisans, food services, vendors etc. Micro businesses in urban as well as in rural areas need this type of boosting and support.


Mudra is basically a loan facilitator and under this, a three tier loan facility has been already set up which varies according to requirement. Mudra has identified three stages of growth according to which the categories are divided. This will, therefore, help an individual to acquire loans.

  1. Stage 1


This is that stage of the business where your enterprise is tiniest.

The loan amount under this is up to RS. 50,000

  1. Stage 2


Now in this stage, the enterprise is a little grown so the loan given to you will be from 50,000 to 5 lac

  1. Stage 3


Now, an enterprise which is growing and is in good shape, the loan will be Rs. 5 to 10 Lac


  • Only people who are above 18 years and Indian citizens can apply for this. Also, they must have a business plan to show.
  • Essentials like structure, investment plans, nature of product, marketing and future results must be present in the business plan
  • The nature of industry should be non-farm earning activity related and needs the investment of not more than Rs. 10 Lac.
  • Other regulations will be same as the RBI guidelines and PMMY rules.


Mudra loan is a very good initiative for the encouragement of small businesses and also grown up businesses. The financial aid required is provided and the eligibility conditions are simple. We hope that the scheme works the way it is planned.

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