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Pradhan Mantri Mudra Yojana

Introduction

PRADHAN MANTRI MUDRA YOJANA was launched by the Government of India in the budget of FY 2016 by the Honourable Finance Minister. MUDRA (Micro Units Development and Refinance Agency) is a Government initiative in order to facilitate easy and prompt loan availability to the Micro, Small and Medium Enterprises (MSMEs) ,i.e., to the non-corporate and non-farm sector. Under this scheme, loans can be provided easily to the eligible applicants without the need of any collateral or security. The range of the loans provided under the PRADHAN MANTRI MUDRA YOJANA is a minimum of Rs. 50,000 to a maximum of Rs. 10,00,000 in case of MSMEs.

About pradhan mantri mudra yojana

Eligibility under PMMY
Documents for PMMY
Loan Details of PMMY
Benefits of PMMY Loans
FAQs – PMMY

Eligibility under PMMY

The main criterion for the eligibility under the PMMY is that all the small and micro enterprises (SMEs) should be from the Non-Corporate and Non-Farm Sector.

A few other criteria to be met for eligibility are,

The Applicant/Business should be engaged in income generating activities, i.e., generating minimum revenues
The Applicant/Business should be engaged in manufacturing, trading or service sector (including allied agricultural activities since 1st April 2016).
Loan amount needs of the Applicant/Business to be of a maximum Rs. 10,00,000.
The minimum and maximum age requirement under PMMY is 18 years and 65 years respectively.

MUDRA loans Under PMMY can be availed by any of the following entities,

Business owners
Shopkeepers
Professionals
Startup Entrepreneurs
Small Industrialists
Manufacturers
Persons involved in agricultural activities

Documents for PMMY

The documents required for the MUDRA Loans are basic KYC documentation like any other loan requirement.

Basic documents,

IDENTITY PROOF	Passport, PAN Card, AADHAR Card, Voter’s ID Card, Driving License, Central and State Government issued Photo ID Proof, etc. (proof of being from a special category like SC/ ST/ OBC, Minority ,if applicable, also to be provided)
RESIDENCE PROOF	AADHAR Card, Ration Card, Bank Account Statement, Telephone Bill, Electricity Bill, Water Bill (Not more than 3 months old), etc.
INCOME PROOF	Salary Slips (not more than 3 months old), ITR, Form-16, etc.

If the entity requires loan for working capital, or if loan is applied under KISHOR or TARUN categories, the additional documents required are,

Business Information

Business address proof
Business registration certificate
Proof of continuity of business
Director Identity Number or DIN for all the Directors, if any.
Photographs of the Applicant(s) or Director(s) or each of the partners
Total experience in the current line of business
Last 2 years actual sales
Projected sales figures, details regarding revenues, debtors and creditors of the entity, working cycles, inventories, promoter’s contribution, etc.
2 years income tax returns
12 months bank statements
Current financial year sales records
For a loan amount of more than Rs. 2,00,000 the applicant must provide the unaudited balance sheet of the previous year
Assets and liabilities statement of the company
Memorandum of Association (MOA), Articles of Association or Partnership Deed
Statuses regarding the Statutory Obligations have to be provided. E.g. Registration under the Shops and Establishment Act, Registration under MSME, latest Sales Tax filed, etc.

Banking /Credit Facilities Existing and Proposed

Types of facilities for savings bank account, current account, cash credit account, term loan account, letter of credit or bank guarantee
Current bank details
The total limit already availed and the amount proposed
The purpose of loan to be availed
A certification statement from borrowers ,if any, that no loan amount was procured from any other financial institutions or any other bank other than the one as mentioned in Section E

Term Loan Required for any Asset/Equipment

Type and purpose of such asset/equipment
Name of the supplier and the quotation of such asset or equipment
Promoter’s total contribution

Loan Details of PMMY

The loans provided under PMMY are divided in three categories based on the stage of business development that the organization seeking the loan is. The details of the loans are mentioned below.

SCHEME	RANGE OF LOAN AMOUNT	MAXIMUM REPAYMENT PERIOD	STAGE OF BUSINESS
SHISHU	UPTO Rs. 50,000	3-5 YEARS	START A BUSINESS OR EARLY STAGE OF BUSINESS
KISHOR	Rs. 50,001 – Rs. 5,00,000	5 YEARS (BANK DISCRETION)	SUSTAIN A BUSINESS
TARUN	Rs. 5,00,001 – Rs. 10,00,000	5 YEARS (BANK DISCERTION)	BUSINESS EXPANSION, PURCHASE OF HEAVY/EXPENSIVE MACHINERY, SET UP A LARGE BUSINESS

Rate of Interest

The interest rates across all the categories of the MUDRA Loans depend upon various factors. These factors are mentioned below.

Amount of loan sought
Applicants profile
Nature of business
Credit score

The interest rates are communicated by the bank to its customers after the completion of the loan submission and verification process.

Benefits of PMMY Loans

The PMMY loans are targeted for the growth and progress of the MSME sector and to provide them with the benefit of easy access to financing options. The PPMY launched with this aim has several benefits in store for the MSME sector. Some of these benefits are discussed below.

One of the main benefits of this scheme is the availability of funds without any need for collateral or security. The lenders provide finance to the eligible borrowers up to Rs. 10,00,000 without any collateral requirements.

Many lenders provide loans under PMMY without any processing charges. In other cases, the processing charges charged by the lenders are at very nominal rates.

The loans provided to the eligible units can be in any of the following form,

Term loans
Overdraft facility
Letter of credit
Bank guarantees

This enables the lenders to cater to a huge range of MSME requirements.

There is no minimum amount of loan prescribed under PMMY unlike many other traditional banking loan options.

The borrowers also get a MUDRA card upon receiving the loan sanction. This card can be utilized for withdrawal purposes from the MUDRA Account up to the permissible withdrawal limits.

FAQs – PMMY

1. How can a person apply for loans under PMMY?

Applicants can apply for loans under PMMY from the website of MUDRA at the following link, Persons can also apply for these loans through the website of the partner banks or financial institutions. Another way to apply for these loans is by going to the nearest branch or office of the bank or financial institution and directly applying for the loans there.

2. What are the eligible lenders under PMMY?

The eligible lenders under PMMY are the following entities,

Non Banking Financial Institutions
Micro Finance Institutions
Public Sector Banks
Private Sector Banks
Regional Rural Banks
Small Finance Banks

3. What is usually the processing time or turnaround time for MUDRA loans under PMMY?

Loans under PMMY are processed quicker (within 24 hours) as compared to traditional loans or loans under other schemes of the Government as a measure to boost the MSME Sector.

4. What are the main motives for MUDRA Loans under PMMY?

The loans under PMMY can be provided for any of the following purposes,

Working capital needs
Business Loans for vendors, shopkeepers, traders, service providers
Growth and expansion of business entities
Startup loans
Equipment financing
Loans to the transport sector
Loans for women entrepreneurs

5. What is the amount of loan that can be availed under PMMY?

Borrowers can avail a minimum of Rs. 50,000 and up to a maximum of Rs. 10,00,000 as loans under PMMY.

6. What is a MUDRA Card that is provided to the borrowers?

Borrowers under PMMY also receive a MUDRA card, essentially a RuPay Card, which can be utilized for various purposes by the business owners like,

for cash credit services
for overdraft facilities
as a debit card with Merchants at Point of Sale
for cash withdrawal from an ATM