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Introduction
Pradhan Mantri MUDRA Yojana (PMMY) is a scheme initiated by the Honourable Prime Minister on April 8, 2015 to provide credit facility to Non-Corporate, Non-Farm MSME units with loans of up to Rs.10 lakh. This credit can be utilized for setting up a new business unit or for expanding an existing enterprise.
MUDRA stands for Micro Units Development & Refinance Agency Ltd. It is a financial institution set up by Government of India for development and refinancing of Micro Unit enterprises. MUDRA has enrolled 27 Public Sector Banks, 17 Private Sector Banks, 27 Regional Rural Banks and 25 Micro Finance Institutions as partner institutions to channel support to the deserving borrower based on eligibility criteria.
Compared to other private sector banks providing loans under the Pradhan Mantri Mudra Yojana scheme, HDFC Mudra Loan offers very competitive interest rates. This has attracted many healthy micro-enterprises to HDFC Mudra Loan. Under this program, the credit provided to micro-enterprises is expected to take off in this financial year.
About HDFC Bank Mudra Loan
- Features of MUDRA loan offered by HDFC Bank
- Types of MUDRA loans offered by HDFC Bank
- Interest rate range for MUDRA loan in HDFC Bank
- Tenure range for MUDRA loan in HDFC Bank
- MUDRA Loan Eligibility Criteria for HDFC Bank
- How to apply for MUDRA loans from HDFC Bank?
- Documents checklist for MUDRA Loan application
- FAQs: HDFC Bank MUDRA Loans
Features of MUDRA loan offered by HDFC Bank
- Loan amounts of up to Rs.10 lakh
- Competitive interest rates in the market determined based on the applicant’s credit profile
- Minimum documentation and a hassle free loan application process
- Funding needs based on the stage of growth and development of the micro unit & entrepreneur’s merit
- Nil processing charges for the loan processing
- Maximum repayment tenure of 5 years
- Collateral free loans to boost the MSME sector
Types of MUDRA loans offered by HDFC Bank
MUDRA Loans are basically of 3 categories. Applicant can apply in the appropriate category based on their needs.
Shishu – Loans up to Rs.50000, with rate of interest being a minimum of 1% per month or 12% per annum. Repayment period of 1-5 years.
Kishore - Loans from Rs.50001 up to Rs.5 lakhs. The interest rate would depend on the lender, keeping the applicant's credit history in mind in compliance with the scheme guidelines. Repayment duration depends on the bank's discretion but not to exceed 5 years.
Tarun - Loans from Rs.5 lakhs to Rs.10 lakhs. The interest rate would depend on the lender, keeping the applicant's credit history in mind in compliance with the scheme guidelines. Repayment duration depends on the bank's discretion but not to exceed 5 years.
Interest rate range for MUDRA loan in HDFC Bank
HDFC Bank offers competitive rate of interest for its MUDRA loans. The Government has not announced any kind of subsidy for these loans. However, HDFC Bank charges interest anywhere between 12.75% to 20% for these loans.
Tenure range for MUDRA loan in HDFC Bank
Though the Government has allowed banks to determine the interest rates based on the applicant’s credit profile, the tenure of repayment of the credit amount is the same for all the banks. The Government has set a total duration of 5 years for the repayment of the sum. Clearing the sum within this timeline is mandatory.
MUDRA Loan Eligibility Criteria for HDFC Bank
MUDRA Loans can be availed by entrepreneurs looking to setup a new business or by established, profit making entities, to expand their business.
Start-up applicants should present a viable business model, depicting the profit making ability of the business model to avail this loan. Start ups are usually categorized under the Shishu scheme and get up to Rs.50000 loan amount.
Established business units, already into profit making, can apply under the Kishor and Tarun categories for credit towards expansion of business or upgradation of machinery and equipment. These applicants have to submit proof of profits and also substantiate the need for machinery and equipment upgradation. They have to explain how this expansion or upgradation can help in bettering their profits and also create more employment opportunities.
The loan can be applied by the following people engaged in Non–Corporate Small Business Segment (NCSB) from both rural and urban areas. This segment comprises of millions of proprietorship or partnership firms running as Small Manufacturing Units, Service Sector Units, Shopkeepers, Fruits & Vegetable Vendors, Truck Operators, Food-service Units, Repair Shops, Machine Operators, Small Industries, Artisans, Food Processors and others.
How to apply for MUDRA loans from HDFC Bank?
MUDRA loans can be applied at the nearest branch of HDFC Bank or through the MUDRA portal. On the portal, you have the option to choose your lender and you can opt for the nearest branch of HDFC Bank.
The applicant has to submit a detailed proposal explaining their business to get the loan. One can check for more information on creating the proposal and the checklist for loan application.
Documents checklist for MUDRA Loan application
MUDRA loan is processed like any other loan and hence requires to be KYC compliant. The applicant should submit the following documents for quick and hassle free loan processing:
- Address proof
- Aadhaar card
- Pan card
- Photographs of applicants
- Business identity proof and address proof
- Income statement of 6 months.
- Supplier details like machinery vendor name, quotation of machinery needed to be bought.
Applicants going for Kishor and Tarun loans should additionally submit the below documents:
- Business address proof
- Business registration certificate
- Proof of continuity of business
- 2 years income tax returns
- 12 months bank statement
- Business profitability proof
The below table illustrates some of the documents you can submit for the loan application:
Identification Documents | Passport, Aadhar Card, Driving Licence, Voter ID |
Residential Address Proof | Power Bill, Gas Bill, Water Bill |
KYC Documents | PAN card of the applicant |
Recent passport size photographs(two) | |
Caste certificate (Only if applicable for special category concessions) | |
Business Documents | Business License from the competent authority |
GST Registration Certificate | |
Certificate from SSI(Small Scale Industries) registration (Only if applicable) | |
Registered or notarised agreement for Rental or ownership proof of the business premises | |
Income tax returns (Last three years) | |
Profit and Loss Account, Balance Sheet (Last three years) | |
Bank Statement of Current Account (Last 12 months) |
FAQs: HDFC Bank MUDRA Loans
1. What is MUDRA?
MUDRA, which stands for Micro Units Development & Refinance Agency Ltd. was announced by the Hon’ble Finance Minister while presenting the Union Budget for FY 2016. This institution was set up by Government of India for development and refinancing activities relating to micro units. It functions with the core purpose of providing funding to the non-corporate small business sector in rural areas where there is not much reach of the traditional banking system.
2. Who are eligible for this credit facility from MUDRA? What kind of borrowers are covered under the MUDRA scheme?
This scheme primarily focuses on Non-Corporate Small Business Segment (NCSBS) comprising largely of proprietorship and partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits and vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.
3.What kind of assistance can I get for food processing units?
Food Processing is very much covered under one of the MUDRA schemes. Please contact your nearest HDFC Bank to know more about the relevant scheme. You can avail assistance under MUDRA schemes as per your requirements.
4. The MUDRA loans give priority to women, Dalits and SC/ST. I am a woman who has completed Beauty Parlour training and would like to set up my own beauty parlour. Which category of MUDRA should I apply loan with?
The Mahila Uddyami Scheme is specially designed for women entrepreneurs and is covered under MUDRA. Under this scheme, women can avail assistance under all three groups, viz. 'Shishu', 'Kishor' and 'Tarun'. Please approach the nearest branch of HDFC Bank with your business proposal and supporting documents. They will let you know of the best interest rates and other offers to suit your needs.
5. Is MUDRA loan better than a Personal loan from HDFC Bank?
MUDRA loans are specifically designed to meet the credit needs of the MSME sector. Personal loans, on the other hand, can be availed by common citizens too. The terms are almost similar for both the loan types. However, MUDRA loan applicants are required to submit a solid business plan that is expected to generate substantial profit and create employment. Personal loans do not require applicants to submit documents explaining the end use of the loan amount.
End Note:
Large scale industries have always been given preference for extending credit facilities since they are believed to generate greater employment opportunities and contribute considerably to the economy. However, it has been established that it is the MSME sector generating more employment opportunities and generating higher revenues. The Pradhan Mantri MUDRA Yojana was established with the sole purpose of facilitating credit to these deserving MSME units, both in rural and urban India, with this mission statement – “To create an inclusive, sustainable and value based entrepreneurial culture, in collaboration with our partner institutions in achieving economic success and financial security." Applicants should create a strong loan proposal and take advantage of this scheme to further their business aspirations.