PM MUDRA
Pradhan Mantri MUDRA Yojana
Pradhan Mantri MUDRA Yojana (PMMY) was launched on 8 April 2015 to provide institutional credit to the large unserved segment of micro and small businesses in India. The scheme operates through MUDRA (Micro Units Development & Refinance Agency Ltd) — a refinancing institution that provides funds to banks, MFIs, and NBFCs which then lend to end borrowers under the MUDRA framework.
MUDRA loans are classified into three categories based on business stage:
**Shishu (₹0 – ₹50,000):** For new, startup-stage micro enterprises needing initial working capital or basic equipment. This is the entry-level loan — ideal for a vegetable vendor needing a cart, a tailor needing a sewing machine, or a food stall starting up. No collateral, minimal documentation.
**Kishore (₹50,001 – ₹5 lakh):** For businesses that are operational and need funds to grow — more equipment, inventory expansion, or working capital. Still no collateral required (banks may ask for collateral in some cases at their discretion).
**Tarun (₹5 lakh – ₹20 lakh):** For established businesses seeking significant expansion. Higher documentation standards, and banks may require collateral. The Tarun Plus category (₹10 lakh – ₹20 lakh) was introduced in 2024 for borrowers who have already repaid previous Tarun loans.
**Who lends?** MUDRA loans are disbursed by: public sector banks, private banks, regional rural banks (RRBs), cooperative banks, microfinance institutions (MFIs), and NBFCs — all registered with MUDRA. You apply at any of these institutions, not at MUDRA directly.
**MUDRA Card:** A RuPay debit card linked to the MUDRA loan account that provides revolving credit — borrowers can draw and repay as needed, like an overdraft facility. Useful for working capital management.
**No MUDRA Central Portal:** Unlike PM-KISAN, there is no central application portal for MUDRA. Applications are made directly at banks or through the Udyami Mitra portal (udyamimitra.in) for PSB loans, or through the Jan Samarth portal (jansamarth.in) which aggregates government loan schemes.
**Who benefits most?** Women entrepreneurs (68% of MUDRA loans), SC/ST entrepreneurs, and rural micro-enterprises have been the primary beneficiaries. The scheme has been credited with formalising the previously unbanked micro-enterprise sector.
Key Objectives
- Fund the unfunded — provide institutional credit to micro and small enterprises excluded from formal banking.
- Promote entrepreneurship among women, SC/ST, and economically weaker sections.
- Create jobs at the bottom of the economic pyramid through self-employment support.
- Formalise and digitise micro-enterprises through credit linkage.
Benefits
Eligibility
- Non-corporate, non-farm micro and small enterprises
- Proprietorship, partnership firms, and small companies in manufacturing, trading, or services
- Street vendors, shopkeepers, artisans, self-employed professionals
- Agriculture-allied activities (food processing, poultry, fisheries — not crop loans)
- New businesses (no minimum operating history for Shishu) and existing businesses
- Must not be defaulter in any bank/financial institution
- Business plan or description of activity required
- Valid identity and address proof required
- Udyam Registration beneficial but not mandatory for Shishu
- Agricultural crop loans — covered under Kisan Credit Card and other agri schemes
- Loans for speculative or illegal activities
- Individuals with default/NPA status in existing loans
How to Apply
Step 1: Prepare — business plan, identity proof, address proof, activity details, quotations for equipment if applicable
Step 2: Choose application route:
(A) Visit nearest PSB bank branch directly — ask for MUDRA loan
(B) Apply online at udyamimitra.in — 'Apply for loan' → MUDRA → fill application → loan proposals sent to multiple banks
(C) Apply via Jan Samarth portal at jansamarth.in — aggregates multiple government loan schemes
Step 3: Bank assesses business viability and creditworthiness
Step 4: Loan sanctioned (Shishu typically 1–2 weeks; Kishore/Tarun 2–4 weeks)
Step 5: Loan disbursed — MUDRA Card (RuPay) issued for working capital loans
Step 6: Repay as per EMI schedule — no prepayment penalty
Required Documents
Frequently Asked Questions
How do I apply for a MUDRA loan?
Two main routes: (1) Walk into any PSB (SBI, PNB, Canara, BOB etc.) or private bank branch and ask for a MUDRA loan — bring your business details, Aadhaar, and address proof; (2) Apply online at udyamimitra.in — create account, fill application, and your proposal is sent to multiple banks. You can also apply through NBFC-MFIs if you're a micro borrower.
What is the interest rate on MUDRA loans?
MUDRA does not fix a national interest rate — each lender (bank, MFI, NBFC) sets its own rate based on the borrower's risk profile. Typically: Shishu loans from PSBs: 8.5–10% p.a.; Kishore: 9–12%; Tarun: 10–13%. MFI-based Shishu loans can be 18–24% (but no collateral and very small amounts). Always compare rates from at least 2 lenders.
Is MUDRA loan free? Is there any subsidy?
MUDRA is a loan — it must be repaid with interest. There is NO general interest subsidy on MUDRA loans. Some state governments or NABARD run additional interest subvention schemes (e.g., for women or SC/ST borrowers in specific sectors) that can reduce your effective rate, but these are state/sector specific, not automatic.
What is the difference between Shishu, Kishore, and Tarun MUDRA loans?
Shishu: Up to ₹50,000 — for new/startup micro businesses; minimal documentation, no collateral; Kishore: ₹50,001 to ₹5 lakh — for growing businesses; moderate documentation; Tarun: ₹5 lakh to ₹10 lakh — for established businesses expanding; Tarun Plus: ₹10 lakh to ₹20 lakh — for borrowers who have already repaid Tarun loans.
Can I get a MUDRA loan without any business or shop?
MUDRA is for existing or new businesses — not for personal loans. If you are starting a new business, you can apply for Shishu with a plan for your business activity. Pure personal loan needs (medical, education, home repair) are not eligible for MUDRA — look at other schemes instead.
What collateral is required for a MUDRA loan?
For Shishu (up to ₹50,000): No collateral — completely collateral-free. For Kishore (up to ₹5 lakh): No mandatory collateral — loans up to ₹10 lakh are covered under CGTMSE guarantee scheme which removes the need for collateral. For Tarun (up to ₹20 lakh): Banks may ask for collateral or guarantor at their discretion.
How long does MUDRA loan approval take?
Shishu loans from PSBs: typically 7–14 working days. Kishore: 14–21 days. Tarun: 3–6 weeks. Through PSBloansin59minutes portal for amounts up to ₹5 crore (including MUDRA): in-principle approval in 59 minutes, full disbursement in 7–10 days. Speed varies by bank and your documentation completeness.
Can I get a MUDRA loan for my food stall or restaurant?
Yes — food and catering businesses are explicitly covered under MUDRA for both equipment purchase and working capital. Popular uses: purchase of cooking equipment, refrigerators, carts, and tables. Even a home-based tiffin service or small catering business qualifies.
I have a bad CIBIL score. Can I still get a MUDRA loan?
A poor CIBIL score (below 650) will significantly hurt your chances — especially for Kishore and Tarun loans. For Shishu (up to ₹50,000), some MFIs and cooperative banks give more weight to your business activity than CIBIL score. If you've defaulted before, you must settle the default first before applying. Women's SHGs can sometimes access Shishu loans through MFIs without individual CIBIL checks.