Pradhan Mantri Mudra Yojana – Benefits and How to Apply!

April 15, 2017 | By Jagjit Singh | Filed in: Government Schemes, Yojana.

The Narendra Modi-led UPA government, ever since it has come into power has never left any opportunity to work for the welfare of people. Pradhan Mantri Mudra Yojana is one of the strongest moves made by the worthy Prime Minister of India, Narendra Modi. There are numerous startups, small businesses, entrepreneurs and companies in our country. The term ‘micro-units’ are used for the collection of such small businesses.  In order to manage their financially stability and growth, Mudra Yojana was launched. MUDRA is an abbreviation of Micro-Units Development and Refinance Agency. The Yojana is a motive to bank the unbanked population of India.

Pradhan Mantri Mudra Yojana | SarkariNiti

It was emphasized by PM Modi that the main purpose of this scheme is to bring the unbanked population under the banking section so that they can feel independent and self-reliant rather than feeling neglected. The slogan of this scheme is, ‘Fund the Unfunded’. This loan scheme was launched on 8th April 2015 by Narendra Modi. The scheme targets small business owners and the loan amount varies from Rs 50,000 to 10 Lakhs.

PMMY consists of three stages

  • Shishu (50,000)

    • The Shishu scheme deals with entrepreneurs who are in the initial stage of starting up their business. Their needs are catered with a loan amount of Rs 50,000 maximum.
  • Kishor (5 Lakhs)

    • The second stage Kishor deals with the entrepreneurs who have already crossed the primitive stage of their business and require an additional amount to take their business forward or to those who need the amount to ignite their business. The amount of loan in this stage lies between Rs 50,000 to 5 lakh.
  • Tarun (10 Lakhs)

    • The last stage deals with an amount of Rs 10 Lakh, if an entrepreneur satisfies all the requirements mentioned for getting the Tarun loan he/she is provided the amount of Rs 10,00,000 which is the highest amount paid under this scheme for a startup.

Microfinance is the basic requirement of people who are in the small business sector so that they have a source to carry out their daily business requirements. The Mudra scheme aims at helping people in small business with microfinance up to 10 lakh. The corpus achieved by the Yojana is more than Rs 70,000 CR and this would have in building up job opportunities and overall outcome.

PM Mudra bank-

  • The Mudra Yojana is supposed to help 58 million small business owners of India. There are around 120 million who are engaged in this field and this population of the country comes from underprivileged sectors of the country.
  • The population of small business owners has often stayed away from bank credits. The reason behind this section being neglected is that the banks often aimed at providing their loan services to secure working businesses who could pay off high interests and had money secured. PM Mudra scheme is an initiative to change this system which is into play for a very long time.
  • Mudra Yojana aims at fulfilling the dreams of young entrepreneurs so that India can move a step forward in the process of development. The credit facility never reached to those entrepreneurs who were in need due to lack in management and inadequate corpus.
  • The recovery of loan has always been a headache for the banks; hence they could not provide credits to the small business owners. Through this initiative by the PMO both, financial institutions and business owners would be catered on the same stage.

How to apply for Mudra loan

An individual who needs PM Mudra help will have to approach the banks which have been selected by the PMO for this purpose. Then one needs to provide the banks with their business ideas and description and fill the Mudra form. If an individual has a preexisting bank account in the same bank, it will quicken up the application procedure. This scheme is a government recognized, administered and approved scheme hence is safe for taking credit. Firstly, an individual who wishes to seek PMMY shave to visit any Private or commercial bank.

Secondly, keep forward one’s business ideas along with loan application with identity proof. All the formalities put forward by the banks need to be met and after completion of all the above-mentioned steps, the loan will be provided to the one seeking it.

Mudra Loan Card

Mudra loan card is a flexible way of using the loan amount. The card acts as a credit card which consists of the provided loan can also behave like a debit card which will permit bank withdrawals. The card works on the RuPay system and at the point of sale (POS). The mudra loan card can be used at ATMs for the purpose of withdrawing money and can also be used at POS platform. Most of the banks have accepted the Mudra Loan Card system.

Interest Rates

Different interest rates have been imposed for different stages in the Pm Mudra Yojana. On the Shishu Yojana which is the basic scheme very nominal interest rates have been imposed like 10-12%. It has been found that the national banks are charging lesser interest rates than this. Mudra Kishor Yojana, the second phase of the Mudra Yojana has imposed interest rates higher than the basic scheme which is 14-17%. This tax rate differs from bank to bank. Mudra Tarun Yojana is the last stage of this Yojana. It is also unsecured like the Kishor Yojana and the interest starts from 16%. It has been observed that there is an interest rate difference between national banks and private banks.

Banks offering Mudra loan

  1. State Bank of India
  2. State Bank of Mysore
  3. State Bank of Hyderabad
  4. State Bank of Travancore
  5. State Bank of Bikaner and Jaipur
  6. State Bank of Patiala
  7. Vijaya Bank
  8. United Bank of India
  9. Union Bank of India
  10. UCO Bank
  11. Syndicate Bank
  12. Punjab and Sind Bank
  13. Oriental Bank of Commerce
  14. Indian overseas Bank
  15. Corporation Bank
  16. Central Bank Of India
  17. Canara Bank
  18. Bank Of Maharashtra
  19. Bank Of India
  20. Bank of  Baroda
  21. Axis Bank
  22. Andhra Bank
  23. Allahabad Bank
  24. ICICI Bank

The government has given a clean chit on the availability of the loan and had clarified that all the categories general, SC, ST and OBC all are eligible for the Mudra Yojana and there are no reservations for this criteria.

Criteria for availing Mudra loan

This scheme serves the small businessmen of India. The government not set up rigid criteria, but the highlighted point is that if a business has a high turnover that business won’t be provided with the Mudra loan. People above the age of 18 are eligible for Mudra loan. The parameters which guide this scheme clearly presents that this loan can’t be availed for educational purpose, for buying a house or a conveyance. Rich and established businessmen also can’t avail this loan facility.

Mudra complaint office

PM Mudra scheme is an organized and planned strategy put forward by the UPA government. In order to seek information or complaint regarding a certain problem, Mudra loan complaint office including helpline, toll-free customer care number have been set up an individual needs to call upon toll-free numbers and file the complaint. The person needs to provide details about the issue and seek the complaint id.

Finance minister Arun Jaitley had stated that the allotment under Pradhan Mantri Mudra Yojana has been doubled under the budget session of 2017-18. It was stated that scheme has provided around 1, 22,000 crores to people in small business across the country.

Criteria for banks and financial companies

  • Scheduled commercial banks

It is mandatory for the scheduled commercial banks in both public and private sector with 3 years consecutive profit track account, net NPAs should not be more than 3%, net worth should not be less than Rs. 100 crore and not less than 9% CRAR are eligible for giving loans.

  • Regional Rural Banks

Regional rural banks have total NPA within 3%. CRAR should be greater than 9% are credible for providing loans under Pradhan Mantri Mudra Scheme.


Mudra scheme is a two-way process, where the mudra bank, on one hand, would facilitate the entrepreneurs with the required loan amount as per their need, whereas, on the other hand, Mudra banks would follow the set rules for recovering the amount from those who have been helped with it in order to maintain the credit system of the country. The loan is to be paid back in tenure of 5 to 7 years.


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