1_Acknowledgement

2_Declaration
3_Introduction
4_Literature review
5_mudhra loan types
6_list of bussiness activities
covered under mudra scheme
7_Benefit of mudhra scheme
8_Eligibility Criteria &
Documents Required
9_How to Apply for a Mudra
Loan
Introduction,_of Pradhan Mantri MUDRA Yojana
(PMMY)
Pradhan Mantri MUDRA Yojana (PMMY) is a flagship
Government of India scheme launched on 8 April
2015 to provide collateral-free loans to micro and
small
non-corporate businesses. The scheme focuses on
street vendors, artisans, shopkeepers, small
manufacturers, service units, and other tiny
entrepreneurs who usually face difficulty getting
bank credit.
PMMY operates through Micro Units Development
and Refinance Agency Ltd (MUDRA), which
refinances banks, MFIs, and NBFCs so they can
lend to micro enterprises at affordable terms.
Objectives
Promote self-employment and entrepreneurship
Provide easy, formal credit to the unorganized
micro sector
Reduce dependence on moneylenders
Support income generation and job creation

Encourage financial inclusion

Loan Categories (as per business
stage) Category
Loan
Limit
Purpose
Shishu
Up to ₹50,000
Starting a small business
Kishore
₹50,001 to ₹5,00,000
Expanding an existing
business Tarun
₹5,00,001 to ₹10,00,000
Business growth and
scaling Key Features
No collateral security required
Available through banks, MFIs,
NBFCs
Suitable for manufacturing, trading, and service
activities Special focus on women, SC/ST, and
minority entrepreneurs
Can be used for working capital, equipment, or
business setup
Eligible Activities (examples)
Tailoring, beauty parlour, repair
shops Food processing, small
manufacturing
Retail shops, street vending
Transport services (e-rickshaw, small vehicles)
Handicrafts and artisan work
Impact
PMMY has helped millions of micro-entrepreneurs
enter the formal credit system, improve
livelihoods, and generate local employment,
especially in semi-urban and rural India.

Literature review:_
Literature on the Pradhan Mantri MUDRA Yojana
(PMMY) highlights its effectiveness in providing
collateral-free loans to micro-enterprises,
effectively "funding the unfunded" and promoting
financial inclusion. Studies indicate the scheme
fosters entrepreneurship, particularly among
women, who constitute a large percentage of
beneficiaries. While it boosts small business
expansion and employment, literature also
suggests challenges regarding NPA risks, lack of
awareness, and the need for support

Key Themes in MUDRA Scheme Literature:

Financial Inclusion and Access to Credit: Research
emphasizes that MUDRA bridges the funding gap
for
small businesses by reducing reliance on informal
moneylenders. It provides easy access to capital
for small manufacturing units, trading, and service
sectors.
Impact on Small Business Growth: Studies suggest
that PMMY serves as a crucial financial tool for
both existing and first-generation entrepreneurs,
improving their business stability and confidence.
Women Empowerment: A significant portion of
literature identifies that a large number of
beneficiaries are women, with 70% of beneficiaries
reported in some studies, promoting
entrepreneurship among women.
Employment Generation: Evidence shows that a
majority of the recipients are creating new job
opportunities, thereby contributing to the
reduction of unemployment in both rural and
urban areas.
Challenges and Limitations: Despite its success,
literature identifies challenges including:
High Risk of Defaults: Due to the unsecured nature
of the loans, there is potential for increased Non-
Performing Assets (NPAs).
Lack of Awareness: Awareness of the scheme is
still limited in certain rural regions.
Regional Imbalances: While overall performance is
good, studies point out that involvement varies
across states and suggests better participation
from regionbank
Who Can Apply?
You can apply if
you:
✔ Are an Indian resident.
✔ Have a business plan (non-farm income
generating
activity) in manufacturing, trade, or services.
✔ Need funding for startup/expansion capital
below the applicable limit.
IndiaLend
s PM
Yojana
IndiaLend
s
Eligible entities include proprietors, partnerships,
companies, self-employed professionals, and small
enterprises.
MSME Ministry
📑 Benefits of Mudra Loan
✅ Collateral-free loan – no security required for
most
loans.
✅ Available for new and existing businesses.
✅ Helps build credit history for small
entrepreneurs.
✅ Loans can be for working capital or equipment
purchase.
✅ Repayment tenure is flexible (often up to 5-7
years depending on amount and lender).
✅ Supported by government guarantee
funds. PM Yojana
IndiaLend
s PM
Yojana
CreditMant
ri Sboss
IndiaLends
🛠 How to Apply
You can apply in two ways:
📍 Offline – Visit a bank, NBFC, or registered lending
institution branch offering Mudra loans and submit
your application plus required documents (ID,
address proof, business plan, etc.).
IndiaLends
🌐 Online – Apply through the Jan Samarth portal or
the relevant bank’s online loan application system.
Sboss
Pro Tip: Come prepared with a simple business
plan and clear purpose for the funds — it improves
your chances of approval.
📌 What the Scheme Means for You
If you're planning to start or grow a small business
like a
shop, tailoring unit, food stall, transport service,
beauty salon, repair shop, etc., Mudra loans can
provide affordable credit without needing property
as collateral. CreditMantriBanking Mantra
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What is Mudra Loan? - A Complete
Guide 12 Aug 2022

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what is mudra loan a complete
guide Table of Content
What is MUDRA
Loan? Types of

MUDRA Loans
List of Business Activities Covered Under MUDRA

Loans Benefits of MUDRA Loan

Eligibility Criteria & Documents

Required How to Apply for a Mudra

Loan?

Why Opt for Mudra Loan from Bank of Baroda?

In its bid to make an ‘Atmanirbhar Bharat’,

Government of India has introduced several
schemes and campaigns.
The Make in India campaign is one of the most
popular ones, aimed at promoting the growth of
homegrown companies. Thus was born the
Pradhan Mantri MUDRA Yojana. Launched in 2015,
this scheme has proven to be extremely
successful. Over the past 6 years since its
establishment, the PMMY scheme has offered INR
15.52 Lakh Crore to over 29.55 crore loan
applicants. The scheme provides a level playing
field to all sections of society. Here, we talk about
the MUDRA Loan scheme and its features.

What is MUDRA Loan?

Micro-Units Development and Refinance Agency
(MUDRA) is a scheme offered under the Pradhan
Mantri
MUDRA Yojana (PMMY). Launched in 2015, the
scheme allows you to avail of business loans of up
to INR 10,00,000 based on the different categories
of MUDRA Loan schemes. All public sector banks,
regional rural banks, co-operative banks, private
sector banks, micro finance institutions, non-
banking finance companies (NBFC), and foreign
banks can lend up to INR 10 Lakhs to small
borrowers for non-farming businesses.

Types of MUDRA Loans

The government has categorised the Mudra loans
into three types based on the funding needs of
the micro-unit or the entrepreneur. The loans are
categorised as under:

MUDRA Shishu Loan

Under the MUDRA Shishu Loan, you can avail up to
INR 50,000 for non-farming ventures. Shishu Loan
serves well for newer enterprises for purchasing
small-scale machinery or financing other
operational costs. Existing businesses, too, can
avail of the loan for smaller expenses such as
renovation or expansion of the establishment.
Micro-industries, self-proprietors, commercial
vehicle owners, fruit and vegetable vendors, etc.,
are eligible applicants for the MUDRA Shishu Loan.
Salient features include repayment tenure of up to
7 years, no minimum loan amount, no collateral
and zero processing charges.
MUDRA Kishor Loan
The loan amount offered by the MUDRA scheme
under the Kishor Loan category ranges from INR
50,000 to INR 5,00,000. Businesses can take
advantage of the higher loan amount to finance
their daily operations, buy heavy machinery and
commercial transport vehicles, etc.
Personal service providers like local grocers,
salons, courier agents, pharmacists, and tailoring
shops, too, are eligible to apply for Kishor Loans.

MUDRA Tarun Loan

The Tarun Loan category of MUDRA Loan offers
loan amounts starting from INR 5 Lakhs to INR 10
Lakhs, with a 3 to 5 year repayment period. The
loan can be availed by aspiring as well as by
established businesses. Newer businesses like
start-ups may require a high amount of working
capital. Older companies can use the loan to
revamp or fund office expansion, make the
necessary
operational purchases, etc.

List of Business Activities Covered Under MUDRA

Loans Transport Vehicles
You can buy vehicles for transporting goods, and
passengers, purchase tractors, two-wheelers,
trolleys and tillers for commercial use.
Community, Social and Personal Services
You can avail of loans for community businesses
such as tailor shops, dry cleaning, cycle and
motorcycle repair shops, pharmacies,
photocopying facilities, gymnasiums, salons,
courier services, etc.

Food Producing Sectors

Small-scale food productions such as pickle or
papad making, home baking, agricultural produce
preservation at the rural level, small food stalls,
sweet shops, catering, canteen services, cold
storage, ice producing micro-units, ice-cream
making units, bakery producing units etc., are
eligible for MUDRA Loans.

Textile Production
You can avail of MUDRA Loans for handloom,
power loom, chikan work, khadi activity, zari
and zardozi work, embroidery and handwork,
computerised embroidery, dyeing and printing,
clothes designing, cotton ginning, knitting,
vehicle and furnishing accessories, and so on.

Traders and Shopkeepers

MUDRA Loans provide financial support with a
loan size of up to INR 10 Lakhs to shop owners,
traders, small enterprise owners and individuals
who run non-farm income-generating businesses.
Equipment Finance Scheme for Micro Units
You can avail of MUDRA Loans of up to INR 10
Lakhs for purchasing necessary machinery for
setting up
micro-enterprises.

Agriculture-allied Activities
Pisciculture (fish farming), apiculture (beekeeping),
poultry, livestock, dairy, etc., are activities that are
allied to agriculture and are eligible for MUDRA
Loans. Producing crops, irrigation, wells etc., do not
qualify for such loans.

Benefits of MUDRA Loan

Following are the benefits of MUDRA Loan:

•Accessibility:
Whether you reside in rural or urban areas, you
can utilise the banking and financial services under
the PMMY scheme. Individuals from the remotest
areas, where basic banking facilities are
unavailable, can receive financial aid.

•No lower limit on the business size:

Small and micro businesses, along with startups,
can achieve financial support.

•Higher Loan Amounts:

MUDRA Loans range up to INR 10,00,000; that
way, you can also avail of smaller loan amounts
for smaller
businesses while having the freedom to access
higher loan amounts if required.

•No Collateral Needed:

Unlike private business loans, you need not pledge
collateral for availing MUDRA Loans.

•Credit Guarantee:
The Government has created the 'Credit
Guarantee Fund for Micro Units' or CGFMU Funds
to combat the issues associated with non-
collateral requirement, thus providing a sense of
comfort to lending institutions.

•Initial funding to start a new business:

Individuals who wish to create a second
income with low-cost businesses can benefit
from the scheme.
Micro-credit scheme offers credits of up to INR 1
Lakh enabling you to start a new business on the
side.

•Affordable Interest Rates:

The MUDRA schemes come with affordable interest
rates to enable flexible and pocket friendly
repayment of loans.

•Extended Repayment Tenure:

Borrowers can repay the loan comfortably in
substantially longer repayment tenures lasting up
to 7 years.
•Promote local Indian businesses:
The MUDRA Loan scheme allows the ‘Make In
India’ campaign to offer investments
opportunities for upcoming start-ups, thereby
boosting India’s infrastructure.

•MUDRA Card:
MUDRA Loan applicants are provided with a Mudra
Card – a type of debit card that applicants can
utilise to fund the working capital requirements.
Applicants can make online transactions as well as
ATM and Point-of-Sale (PoS) transactions.

Eligibility Criteria & Documents

Required You can apply for a MUDRA
Loan if you are:

An Indian citizen
In the age group of 18 and maximum 65 years(at
the time of final EMI repayment)
Planning to start a business in non-agricultural
activities requiring a loan amount less than INR 10
Lakhs.
Following is the list of documents you need to
present when applying for a MUDRA Loan:

Duly filled Mudra Loan application form.

Identity proof documents like Aadhaar/PAN/Driving
License/Passport/Voter ID/ Government-issued
photo ID of all applicants (in case of joint loans).
Residence proof documents like latest utility bill/
Aadhaar/Voter ID/Passports/bank account
statement of all applicants (in case of joint loans).
Business ID and Address proof documents
(Licenses/Registration Certificates/Deed Copy,
etc.). Latest photographs of the applicant/s.
Proof of minority, if any.
Proof of loan requirement, i.e., equipment
quotations, vendor details, etc.
How to Apply for a Mudra Loan?
You can apply for a Mudra Loan both online and
offline at nationalised and Private sector banks.
You simply need to fill a form (available on the
bank’s website or their nearest branch) and
provide details about the applicable Mudra Loan
category under which you need the loan,
information about your business enterprise and the
funds required under the loan. The bank verifies
your loan application.
Once it is verified, the bank credits the funds
into your brand new Mudra Loan account, with
which it also provides a Mudra Debit Card.

Why Opt for Mudra Loan from Bank of Baroda?

Bank of Baroda is a public sector undertaking (PSU)
bank serving Indians for over a century and offers
loans to borrowers under the MUDRA scheme. Here
is why you should opt for Mudra Loan from Bank of
Baroda:
No processing charges or collateral: Bank of
Baroda charges zero processing fees for the
MUDRA Loan scheme. Moreover, you are not
required to pledge any collateral.
No minimum loan amount: There is no lower limit
on the amount you can borrow under the scheme.
Longer repayment tenure: Bank of Baroda offers
repayment tenures of up to 7 years with
moratorium provisions subject to eligibility.
Working capital loan borrowers can avail a 1-year
repayment period.
No pre-closure charges: You can repay the loan
before the end of your repayment tenure without
paying any
pre-closure charges.
To know more about the MUDRA Loan scheme
offered by Bank of Baroda get in touch with us
today. You can visit the nearest Bank of Baroda
branch or call us up on 1800 5700

Important documents of small bussiness,:_

For small businesses (up to Rs 10 lakh) under the

PM Mudra Yojana (PMMY),documents such as
Aadhaar card, PAN card, proof of business
(GST/Udyog Aadhaar), bank statement for the last
6 months, and passport-size photo
are required. You can apply online or offline by
visitingthe JanSamarth portal or any
government/private bank. [Link]
[Link]
+4
1. Required
Documents PSB Loans
in 59 Minutes PSB
Loans in 59 Minutes
+2
ID Proof: Aadhaar Card, PAN Card, Voter ID,
Passport, or Driving License.
Address Proof: Aadhaar Card, Utility Bill
(Electricity/Water Bill), or Rental Agreement.
Business Proof: Business Registration Certificate,
GST Number, or Udyog Aadhaar.
Bank Statement: Bank statement for the last 6
months. Others: Passport size photographs, Project
report (if required).
DMI
Finance
DMI
Finance
+3
2. How to Apply for Mudra
Loan myScheme
myScheme
+2
Online: Visitthe JanSamarth portal , select your
loan type (Shishu, Kishor, Tarun) and fill the form.
Offline: Visit your nearest government or private
bank (SBI, HDFC, etc.) branch and apply for
Mudra Loan. Categories:
Shishu: Up to ₹50,000
Teenager: ₹50,001 to ₹5 lakh
Tarun: ₹5 lakh to ₹10 lakh
3. Common
Challenges PMF IAS
PMF IAS
High NPAs: NPAs in public sector banks rise to
3.6%. Lack of documents: Lack of proper
business proof.
CIBIL Score: Not getting a loan due to a poor CIBIL
score. Regional disparity: Loans are not easily
available in some regions.

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e
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Mudra Loan
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MUDRA Loan Yojana (PMMY): Shishu, Kishore,
Tarun, and TarunPlus Explained
Published on: 28 Oct 2025
Last updated on: 14 Apr 2026
Post Views: 29322
Share
Mudra Loan Scheme
Collateral plays an important role when applying
for a business loan. It serves as a security blanket
for lenders (Banks & NBFcs) and a way to access
funds for borrowers. According to an IAMAI report,
only 30% of the credit demand of India’s small
businesses is met. This is why the Government of
India introduced Pradhan Mantri MUDRA Yojana
(PMMY), which offers collateral-free business loans.

Under the PMMY Yojana, you can apply for

business loans of ₹20 lakh without providing
security or collateral. In this blog, we will
understand what MUDRA Yojna is in 2026, MUDRA
loan eligibility, subsidy, bank list, and the
application process.

What is Pradhan Mantri MUDRA Yojana

(PMMY)? Launched on 8th April 2015, Pradhan
Mantri MUDRA Yojana (PMMY) is a flagship
scheme that offers collateral-free loans to
micro and small businesses.
MUDRA stands for Micro Units Development and
Refinance Agency. The key objective of the
scheme is to offer financial assistance to
entrepreneurs who run small businesses and
microenterprises.

Under the scheme, you can access loans from

banks, Non-Banking Financial Companies
(NBFCs), and Micro
Finance Institutions (MFIs). The MUDRA Yojana
subsidy, however, excludes farm income-
generating businesses. The loans are collateral-
free, which means they are approved fast.

PMMY Loan Categories: Shishu, Kishore, Tarun,

and Tarun Plus
PMMY loans are classified based on the phase and
requirements of the business. Here are the four
main categories of PMMY loan schemes you can
avail:

1. Shishu Loan (Up to ₹50,000)

The category offers loans to startups, street
vendors, small shopkeepers, home-based
entrepreneurs, and service providers who are
starting from scratch. It allows the businesses to
finance initial expenses such as raw
material purchase, stock, basic equipment, or a
shop/stall.

2. Kishore Loan (₹50,000 to ₹5 lakh)

This category is ideal for manufacturing businesses
that require funds to grow. It provides funds to
purchase equipment, machinery, hire employees,
manage working capital, or scale current
operations.

3. Tarun Loan (₹5 lakh to ₹10 lakh)

It is ideal for businesses with stable business
operations and expansion in the business plan. As
a business owner,
you can use the funds to purchase machinery, set
up new units, enter into new markets, or
undertake production on a large scale.

4. Tarun Plus Category (₹10 lakh to ₹20 lakh)

It is ideal for businesses that have expanded
extensively and now need more funding to scale
their business operations and expand further. It
provides businesses with additional financial
support to scale their production.
However, it is only available to businesses that
have availed and successfully repaid loans under
the Tarun category.

PMMY Loan Categories and

Coverage PMMY Category Loan
Amount Shishu Up to ₹50,000
Kishore ₹50,000 – ₹5 lakh
Tarun ₹5 lakh – ₹10 lakh
TarunPlus ₹10 lakh – ₹20
lakh
Check MUDRA Loan Eligibility Criteria to Qualify for
the Loan
Here is the MUDRA loan eligibility criteria you must
meet in order to qualify for the loan:

The applicant must be at least 18 years old and a

maximum of 65 years old.
You must be an eligible borrower:
Individuals
Sole proprietorship
Private limited
company Public
limited company
Partnership firm
Any other legal entity
The candidate should have a business plan or be
running a small business.
The business must be a non-farm enterprise in
trading, manufacturing, and services.
Your credit needs must be below ₹20 lakh.
Any shop owner, vendor, small producer,
craftsman, food processing unit owner, repair shop
owner, transport business owner, or service
business owner can apply.
Businesses related to agriculture (such as farming)
are not eligible, but agriculture support-related
businesses (such as equipment, services, or food
processing) can apply for a MUDRA loan online.

Documents Required for Pradhan Mantri MUDRA

Yojana Here are the documents that you must
gather and submit when applying for a MUDRA
Yojana subsidy:

Shishu
Identity Proof (Voter’s ID card/Driving License/PAN
Card/Aadhaar Card/Passport)
Address Proof (Recent electricity bill, telephone bill,
property tax receipt, Aadhaar Card, Passport,
Voter’s ID card)
Applicant’s recent photograph (2 copies)
Proof of SC/ST/OBC/Minority (When applicable)
Address of the business (If available)
Quotation of machinery/equipment/other items to
be purchased
Bank statement
Kishore, Tarun, and TarunPlus

Identity Proof (Voter’s ID card/Driving License/PAN

Card/Aadhaar Card/Passport)
Address Proof (Recent electricity bill, telephone bill,
property tax receipt, Aadhaar Card, Passport,
Voter’s ID card)
Applicant’s recent photograph (2 copies)
Proof of SC/ST/OBC/Minority (When applicable)
Address of the business (If available)
Bank statement
Quotation of machinery/equipment/other items to
be purchased
Address of the business (Rent agreement/Other
documents)
Udyog registration
The last two years’ unaudited balance
sheets Sales achieved during the current
financial year Proforma
Invoices/Quotations
Asset &iability statement of the borrowerl

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Mudra Loan
Scheme
MUDRA Loan Yojana (PMMY): Shishu, Kishore,
Tarun, and TarunPlus Explained
Published on: 28 Oct 2025
Last updated on: 14 Apr 2026
Post Views: 29322
Share
Mudra Loan Scheme
Collateral plays an important role when applying
for a business loan. It serves as a security blanket
for lenders (Banks & NBFcs) and a way to access
funds for borrowers. According to an IAMAI report,
only 30% of the credit demand of India’s small
businesses is met. This is why the Government of
India introduced Pradhan Mantri MUDRA Yojana
(PMMY), which offers collateral-free business loans.
Under the PMMY Yojana, you can apply for
business loans of ₹20 lakh without providing
security or collateral. In this blog, we will
understand what MUDRA Yojna is in 2026, MUDRA
loan eligibility, subsidy, bank list, and the
application process.

What is Pradhan Mantri MUDRA Yojana

(PMMY)? Launched on 8th April 2015, Pradhan
Mantri MUDRA Yojana (PMMY) is a flagship
scheme that offers collateral-free loans to
micro and small businesses.
MUDRA stands for Micro Units Development and
Refinance Agency. The key objective of the
scheme is to offer financial assistance to
entrepreneurs who run small businesses and
microenterprises.

Under the scheme, you can access loans from

banks, Non-Banking Financial Companies
(NBFCs), and Micro Finance Institutions (MFIs).
The MUDRA Yojana subsidy, however, excludes
farm income-generating businesses. The loans
are collateral-free, which means they are
approved fast.

PMMY Loan Categories: Shishu, Kishore, Tarun,

and Tarun Plus
PMMY loans are classified based on the phase and
requirements of the business. Here are the four
main categories of PMMY loan schemes you can
avail:

1. Shishu Loan (Up to ₹50,000)

The category offers loans to startups, street
vendors, small shopkeepers, home-based
entrepreneurs, and service providers who are
starting from scratch. It allows the businesses to
finance initial expenses such as raw
material purchase, stock, basic equipment, or a
shop/stall.

2. Kishore Loan (₹50,000 to ₹5 lakh)

This category is ideal for manufacturing businesses
that require funds to grow. It provides funds to
purchase equipment, machinery, hire employees,
manage working capital, or scale current
operations.

3. Tarun Loan (₹5 lakh to ₹10 lakh)

It is ideal for businesses with stable business
operations and expansion in the business plan. As
a business owner, you can use the funds to
purchase machinery, set up new units, enter into
new markets, or undertake production on a large
scale.
4. Tarun Plus Category (₹10 lakh to ₹20 lakh)
It is ideal for businesses that have expanded
extensively and now need more funding to scale
their business
operations and expand further. It provides
businesses with additional financial support to
scale their production.
However, it is only available to businesses that
have availed and successfully repaid loans under
the Tarun category.

PMMY Loan Categories and

Coverage PMMY Category Loan
Amount Shishu Up to ₹50,000
Kishore ₹50,000 – ₹5 lakh
Tarun ₹5 lakh – ₹10 lakh
TarunPlus ₹10 lakh – ₹20
lakh
Check MUDRA Loan Eligibility Criteria to Qualify for
the Loan
Here is the MUDRA loan eligibility criteria you must
meet in order to qualify for the loan:

The applicant must be at least 18 years old and a

maximum of 65 years old.
You must be an eligible borrower:
Individuals
Sole proprietorship
Private limited
company Public
limited company
Partnership firm
Any other legal entity
The candidate should have a business plan or be
running a small business.
The business must be a non-farm enterprise in
trading, manufacturing, and services.
Your credit needs must be below ₹20 lakh.
Any shop owner, vendor, small producer,
craftsman, food processing unit owner, repair shop
owner, transport business owner, or service
business owner can apply.
Businesses related to agriculture (such as farming)
are not eligible, but agriculture support-related
businesses (such as equipment, services, or food
processing) can apply for a MUDRA loan online.

Documents Required for Pradhan Mantri MUDRA

Yojana Here are the documents that you must
gather and submit when applying for a MUDRA
Yojana subsidy:

Shishu

Identity Proof (Voter’s ID card/Driving License/PAN

Card/Aadhaar Card/Passport)
Address Proof (Recent electricity bill, telephone bill,
property tax receipt, Aadhaar Card, Passport,
Voter’s ID card)
Applicant’s recent photograph (2 copies)
Proof of SC/ST/OBC/Minority (When applicable)
Address of the business (If available)
Quotation of machinery/equipment/other items to
be purchased
Bank statement
Kishore, Tarun, and TarunPlus

Identity Proof (Voter’s ID card/Driving License/PAN

Card/Aadhaar Card/Passport)
Address Proof (Recent electricity bill, telephone bill,
property tax receipt, Aadhaar Card, Passport,
Voter’s ID card)
Applicant’s recent photograph (2 copies)
Proof of SC/ST/OBC/Minority (When applicable)
Address of the business (If available)
Bank statement
Quotation of machinery/equipment/other items to
be purchased
Address of the business (Rent agreement/Other
documents)
Udyog registration
The last two years’ unaudited balance
sheets Sales achieved during the current
financial year Proforma
Invoices/Quotations
Asset & Liability statement of the borrower

How to Apply for MUDRA Loan Online?

You can apply for a Mudra loan under PMMY both
online and offline.
1. Applying at NBFCs and Banks

Select the loan category best suited for your

business. Visit the branch of any bank from the
Mudra Loan Bank list.
Get and fill out the PMMY application form.
Attach all the required documents to the
form.
Submit the form to the bank of NBFC. After
approval, the loan amount will be disbursed into
your account.
2. Apply Online for Mudra loan

Select from the Shishu, Kishore, Tarun, or

TarunPlus category depending on the amount of
funds you need. Visit the MUDRA-approved bank
or NBFC’s webpage.
Fill in the MUDRA loan application form with
information regarding your business, the purpose
of the loan, and the amount required.
Include the following important
documents: Identity and address proof
Evidence of business
registration. Bank statements
(past six months)
Quotation of machinery/equipment (where
applicable) The bank authenticates your
documents, examines your credit profile, and
evaluates your business plan.
After approval, the loan amount is deposited into
your account. You can also be issued a MUDRA
Card to
withdraw money and carry out business.
Benefits of MUDRA Yojana for Small
Businesses
Here are the key benefits of MUDRA Yojana that
make business financing more accessible and
seamless:

No Collateral Needed: MUDRA loans are

unsecured, which means you don’t need to
submit any assets as security.
Easy Access to Funds: You can get a collateral-
free business loan without submitting extensive
paperwork. Low Interest Rates: Under the
MUDRA scheme, the business loan interest rates
are lower than traditional loans.
More than One Category: There are multiple
categories that you can choose from, including
Shishu, Kishore, Tarun, or TarunPlus.
Flexibility: The PMMY Yojana offers working capital
loans, term loans, overdraft limits, and more.

As a business owner, you know that there is

always a need to get seamless access to funds,
whether for managing working capital or
expanding. However, a lack of collateral always
gets in the way of small businesses. PMMY not
only offers financing but also provides
confidence to hundreds of thousands of small
enterprises to grow.

Take your business forward with DMI Finance’s

collateral-free business loans. When you apply
for a business loan, you get access to benefits
like seamless approvals, terms without hidden
costs, and flexible repayment terms tailored for
your growth.

Frequently Asked Questions (FAQs)

1. What is the maximum amount I can get under
PMMY?

Under the TarunPlus category of PPMY Yojana, you

can apply for a business loan of up to ₹20 lakh.
However, you are eligible for the TarunPlus
category if you have taken and successfully repaid
the loan under the Tarun loan category.

2. Do I need collateral to get a MUDRA loan?

No, PMMY offers unsecured loans, which means

you are not required to provide any property,
asset, or security.

3. How do I check if I am eligible?

You are eligible for MUDRA loan if you are aged
between 18 to 65 years and are running or starting
a small
non-farm business.

4. Is there any subsidy in MUDRA loans?

There is no direct Mudra Yojana subsidy, but loans

can be covered under credit guarantee schemes.

5. Can students apply for MUDRA loans?

Yes, you can apply for an MUDRA loan as a student

if you are above 18 years old.

6. Which banks provide MUDRA loans?

Almost all major banks and NBFCs offer business

loans under PPMY. Here is an MUDRA loan bank list
of all lending partners.

7. How can I apply for a MUDRA loan online?

You can apply for a Mudra loan online through the

official websites of participating banks and NBFCs.

8. What is the interest rate of MUDRA loans?

 It depends on the bank and loan category, but it is
usually lower than traditional business loans.

9. Can MUDRA loans be used for personal

expenses?

No, business loans under PMMY are approved only

for business purposes, like managing cash flow,
buying machinery, or hiring employees.

[Link] long does it take to get approval for

MUDRA loans?

The time may vary, but many applications are

processed within a few days if the documents are
complete.

Business Loan of Different Amounts

₹5 Lakh Business Loan ₹10 Lakh Business Loan
₹15 Lakh Business Loan ₹20 Lakh Business
Loan About the Author
DMI Finance Editorial Team
DMI Finance provides seamless and hassle-free
loan solutions for individuals and businesses across
India. We write about finance, credit, and
opportunities that matter to you.

Product / Offerings of MUDRA

Micro Units Development and Refinance Agency
Ltd. [MUDRA] is an NBFC supporting development
of micro enterprise sector in the country. MUDRA
provides refinance support to Banks / MFIs / NBFCs
for lending to micro units having loan requirement
upto 20 lakh. MUDRA provides refinance support to
micro business under the Scheme of Pradhan
Mantri MUDRA Yojana. The other products are for
development support to the sector. The bouquet of
offerings of MUDRA is depicted below. The
offerings are being targeted across the spectrum of
beneficiary segments.

Mudra Offerings

Pradhan Mantri MUDRA Yojana (PMMY)

Under the aegis of Pradhan Mantri Mudra Yojana
(PMMY), MUDRA has created products/ schemes.
The interventions have been named 'Shishu',
'Kishore' , 'Tarun' and 'Tarun Plus' to signify the
stage of growth / development and funding needs
of the beneficiary micro unit / entrepreneur and
also provide a reference point for the next phase
of graduation / growth to look forward to :

Shishu : covering loans upto 50,000/-

Kishor : covering loans above 50,000/- and upto 5
lakh Tarun : covering loans above 5 lakh and upto
10 lakh
Tarun Plus: covering loans above 10 lakh and
upto 20 lakh
With an objective to promote entrepreneurship
among the new generation aspiring youth, it is
ensured that more focus is given to Shishu
Category Units and then Kishore and Tarun and
Tarun Plus categories.

Within the framework and overall objective of

development and growth of micro enterprises
sector under Shishu, Kishore, Tarun and Tarun Plus,
the products being offered by MUDRA are so
designed, to meet requirements of different sectors
/ business activities as well as business/
entrepreneur segments.

The funding support from MUDRA are of two types:

Micro Credit Scheme (MCS) for loans up to 1 lakh

finance through MFIs.
Refinance Scheme for Commercial Banks / Regional
Rural Banks (RRBs) / Small Finance Banks / Non
Banking Financial Companies (NBFCs).
Micro Credit Scheme:
Micro Credit Scheme is offered mainly through
Micro Finance Institutions (MFIs), who deliver the
credit up to 1 lakh, for various micro enterprise /
small business activities. Although the model of
delivery may be through SHGs/JLGs/ Individuals,
the loans are given by the MFIs
to individual entrepreneurs for specific income
generating micro enterprise/ small business
activities.

Refinance Scheme for Banks/NBFCs/MFIs

Different banks like Commercial Banks, Regional
Rural Banks, Small Finance Banks, Urban Co-
operative Banks and NBFCs are eligible to avail
refinance support from MUDRA for financing micro
enterprise activities. The refinance is available for
term loan and working capital loan up to an
amount of 20 lakh per unit. The eligible
Banks/NBFCs/MFIs, who comply with the
requirements as notified, can avail refinance from
MUDRA for the loans given by them for eligible
MUDRA compliant activities under Shishu, Kishore,
Tarun and Tarun Plus categories.
In order to encourage women entrepreneurs, the
financing Banks/NBFCs/MFIs may consider
extending additional facilities, including interest
reduction on their loan.

Purpose of MUDRA loan

Mudra loan is extended for a variety of purposes
which result in income generation and employment
creation. The loans are extended mainly for:

Business loan for Vendors, Traders, Shopkeepers

and other Service Sector activities
Working capital loan through MUDRA
Cards Equipment Finance for Micro Units
Transport Vehicle loans for commercial use only
Loans for agri-allied non-farm income generating
activities,
e.g. pisciculture. bee keeping, poultry farming, etc.
Tractors, tillers as well as two wheelers used for
commercial purposes only.
Following is an illustrative list of the activities that
can be covered under MUDRA loans:

1) Transport Vehicle
Purchase of transport vehicles for transportation of
goods and passengers such as auto rickshaws,
small goods transport vehicles, 3 wheelers, e-
rickshaws, taxis, etc.
Tractors/Tractor Trolleys/Power Tillers used only
for commercial purposes are also eligible for
assistance under PMMY. Two Wheelers used for
commercial purposes are also eligible for
coverage under PMMY.

2) Community, Social & Personal Service

Activities Salons, beauty parlours, gymnasium,
boutiques, tailoring shops, dry cleaning, cycle
and motorcycle repair shops,
DTP and Photocopying Facilities, Medicine Shops,
Courier Agents, etc.

3) Food Products Sector

Activities such as papad making, achaar making,
jam/jelly making, agricultural produce preservation
at rural level, sweet shops, small service food stalls
and day to day
catering / canteen services, cold chain vehicles,
cold storages, ice making units, ice cream
making units, biscuit, bread and bun making,
etc.

4) Textile Products Sector / Activity

Handloom, powerloom, khadi activity, chikan work,
zari and zardozi work, traditional embroidery and
hand work, traditional dyeing and printing, apparel
design, knitting, cotton ginning, computerized
embroidery, stitching and other textile non
garment products such as bags, vehicle
accessories, furnishing accessories, etc.

5) Business loans for Traders and Shopkeepers

Financial support for on lending to individuals for
running their shops / trading & business activities /
service enterprises and non-farm income
generating activities with beneficiary loan size of
up to 10 lakh per enterprise / borrower.

6) Equipment Finance Scheme for Micro Units

Setting up micro enterprises by purchasing
necessary
machinery / equipments with per beneficiary loan
size of upto 20 lakh.

7) Activities allied to agriculture

'Activities allied to agriculture', e.g. pisciculture,
bee keeping, poultry, livestock-rearing, grading,
sorting,
aggregation agro industries, diary, fishery, agri-
clinics and agribusiness centres, food & agro-
processing, etc.(excluding crop loans, land
improvement such as canal, irrigation and wells)
and services supporting these, which promote
livelihood or are income generating shall be
eligible for coverage under PMMY in 2016-17.

MUDRA Card
.Creation of Framework for "Small Business Finance
Entities"
An enabling framework for support to "Small
Business Finance Entities" would be created
leading to formalization of the economy which is
presently included in the informal sector.

Synergies with Make in India Campaign

Government of India has initiated several
steps for
encouraging enterprise creation in our country.
The major one is Make in India movement. Make in
India is a major national programme designed to
facilitate investment, foster innovation, enhance
skill development, project
intellectual property and build best in class
manufacturing infrastructure. This coupled with
Start-up India and
Stand-up India campaign, has created a conducive
environment of enterprise creation in different
scales. MUDRA, being an initiative for promoting
micro
enterprises, fits well with Make in India initiative for
supporting these micro enterprises.

Synergies with National Rural Livelihoods Mission /

National Urban Livelihood Mission
The National Rural Livelihoods Mission [NRLM] is
set up "To reduce poverty by enabling the poor
households to access gainful self-employment and
skilled wage employment opportunities, resulting
in appreciable improvement in their livelihoods on
a sustainable basis, through building strong
grassroots institutions of the poor." To achieve the
above, NRLM Mission inter alia follows a demand
driven strategy for continuous capacity building,
imparting requisite skills and creating linkages with
livelihood opportunities for the poor, including
those emerging in the organized sector.

Similarly, the Deendayal Antodaya Yojana [DAY]

National Urban Livelihood Mission is another
programme which is aimed at reducing Urban
poverty through creation of micro enterprises,
individually and group mode.

MUDRA, being an initiative for promoting micro

enterprises, would make all efforts to draw
synergies between NRLM, NULM and MUDRA
interventions for supporting micro enterprises and
creating sustainable livelihood opportunities for the
poor.
Synergies with National Skill Development
Corporation NSDC is already engaged in the
process of skill development at a National scale.
Synergizing with NSDC will help MUDRA in
augmenting the skill sets of the
sectoral players.

The MUDRA Pricing

Access to finance is critical and equally critical is
the cost of finance to the Non Corporate Small
Business Sector/ultimate beneficiary. The funds
mobilized by micro units from the informal sources
are at a high cost. There is scope for cost
rationalization. However, the rationalization is
intricately linked with the cost of funds for the last
mile MFIs.

GOI while announcing the formation of MUDRA,

also announced a refinance corpus for MUDRA to
be allocated by RBI from the Priority Sector lending
shortfall.
Accordingly, RBI has provided the allocation which
helps in bringing down the cost of lending at the
ultimate borrower level as MUDRA refinance will
reduce the average borrowing cost of the lending
institutions.

The NBFC-MFIs/MFIs are presently regulated by

Reserve Bank of India. The sector has been
constantly trying to reduce its costs and MUDRA
would also help
NBFC-MFIs/MFIs reduce their cost to bring down the
overall cost to the end beneficiaries. Further, at the
time of appraisal, MUDRA would be studying /
assessing
individual MFIs on this as well as other related
parameters and suitably price its assistance based
on such assessment.

In the case of Banks, RBI has also put a cap on the

interest rate at yield on 10 year G-Sec for lending
micro units by Commercial Banks by availing of
MUDRA refinance. Similarly, the RRBs have been
given an interest cap of 3.50% over and above
MUDRA refinance rate, while lending a PMMY loan
by availing of MUDRA refinance.

In case of NBFCs, RBI has also stipulated an

interest cap of 8% over and above MUDRA
refinance while their lending to MUDRA segment.

All these are expected to have a positive impact

on the pricing of MUDRA loans in the country
whereby the Micro enterprises will be able to avail
credit at an affordable interest rate. But, the first
and foremost objective is to ensure accessibility of
credit.

(Guidelines may be applicable as per latest RBI

directions) Development and Promotional Support
Besides the credit constraints, the Non Corporate
Small Business (NCSBS) face many non-credit
challenges, like,

Skill Development Gaps

Knowledge Gaps
Information Asymmetry
Financial / Business Literacy
Lack of growth orientation
To address these constraints, MUDRA plans to
adopt a credit- plus approach in future and offer
Developmental and Support services to the target
audience. It will act as a market maker and
build–up an ecosystem with capacities to deliver
value in an efficient and sustainable manner.

Financial / business literacy or financial education

can broadly be defined as 'providing familiarity
with and understanding of financial market
products, especially rewards and risks, in order to
make informed choices.'

Financial Inclusion and Financial / business Literacy

are twin pillars. While Financial Inclusion acts from
supply side providing the financial market /
services that people demand, Financial Literacy
stimulates the demand side
– making people aware of what they can
demand. Supporting the financial literacy drive will
contribute substantially from the demand side to
the national agenda of financial inclusion.

To address these constraints, MUDRA will adopt a

credit-plus approach and offer Developmental
and Support services to the target audience. It
will act as a market maker and build –up an
ecosystem with capacities to deliver value in an
efficient and sustainable manner. This apart, the
micro enterprise segment also needs business
literacy which will help them in acquiring
knowledge on running / managing business,
keeping accounts, working out ratios, etc.

Promotion and Support of Grass Root

Institutions One of the major focus areas will
be to formalize and institutionalize the last
mile financiers / grass root
institutions so that a new category of financial
institutions viz. Small Business Finance Companies
can be created and ecosystem developed for their
growth.

Rural innovations at micro enterprise / unit level

would also be one of the key areas for intervention
and support. Support to Micro units by way of the
facility of incubators
would be taken up. This would ensure that at the
most grass root levels in the country, there is
climate for promotion of innovation as well as
incubation of ideas from educated rural youths
which would germinate in viable micro enterprises.

Working with Credit Bureaus

With the growth of responsible lending practices,
Credit Bureaus (CB) have gained increasing level of
acceptability in the micro finance sector. The CB
culture will help in creating credit history over a
period of time which will facilitate faster credit
dispensation as the system evolves.

Working with Rating Agencies

Accreditation / rating of MFI entities is one of the
roles earmarked for MUDRA. Further, a segment of
financial intermediaries for the non-corporate small
business sector is envisaged to emerge in the
financing architecture.
MUDRA would work in coordination with Rating
Agencies so that appropriate rating framework(s)
which take into account sector specific features are
devised for various sector participants. In the
longer run, availability of rating for sector
participants would facilitate formalization and
further flow of capital to the sector.

Portfolio Credit Guarantee

Traditional institutional financing in Indian context
adopts an Asset Based Lending Approach with
emphasis on
collateral security. Micro units, most of the times,
are unable to provide the comfort of collateral.
Hence,
MUDRA loans, i.e., loans up to 20 lakh, have been
made collateral free, as per the RBI norms in this
regard.

To mitigate the issue of collateral and to provide

comfort to the lending institutions, a Credit
Guarantee Product is extended by creation of a
Fund called Credit Guarantee Fund for Micro Units
[CGFMU]. All eligible micro-loans sanctioned since
April 08, 2015 are covered under the above
guarantee. The Scheme is being managed by
National Credit Guarantee Trustee Company Ltd.
[NCGTC], an agency promoted by the GOI. The
Guarantee product is one of the key interventions
made with the objective of bringing down the cost
of funds and facilitating ease of access to
institutional credit for the end beneficiary to
improve his creditworthiness.