Startup Funding

Take a look at what Government has offered with Pradhan Mantri Mudra Yojana

Written by Harshad Patankar

NDA government has launched the Pradhan Mantri Mudra Yojana under the Micro Units Development and Refinance Agency (MUDRA).  It was announced by the Finance Minister while presenting the Union Budget for2015-16. The purpose of MUDRA is to provide funding to the non corporate small business sector.

What is a idea behind this Project ?

Being a business oriented vision of current prime minister Mr. Narendra Modi, under his guidance the government has identified reason behind non entrepreneurship in India as the lack of financial support. This plays as  biggest bottleneck to the growth of small business in the country.

What does it offer?

MUDRA Yojana is offering the following interventions which will be funded namely

  • ‘Shishu’,
  • ‘Kishor’ and
  • ‘Tarun’

this will 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 . Based on the choices of the yojana loan will be disbursed to applicants.

Limit for the applicants under different category is as follows

  • SHISHU – covering loans up to  Rs 50,000/-
  • KISHOR – covering loans above  Rs 50,000/- and up to  Rs 5 lakh
  • TARUN  – covering loans above Rs 5 lakh and up to Rs 10 lakh

Who are eligible for this scheme ?

All Loans will be given to only non-farm income generating enterprises in manufacturing, trading and services. Income limit of the applicant needs to be below Rs.10 lakh.

Who will be going to disburse loan ?

Loan will be disbursed by all the Public Sector Banks, Regional Rural Banks, State Cooperative Banks and Urban Co-operative Banks will be known as MUDRA loans under the Pradhan Mantri MUDRA Yojana (PMMY). Essentially, all those who wish to avail loans below Rs 10 lakh for their micro units are eligible for the loan.

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What about the Business Plan?

About 27 basic project profiles for micro-units are prepared by the National Institute of Micro, Small & Medium Enterprises (NIMSME). These project profiles help the prospective entrepreneurs come up with a basic business plan. While this is not a comprehensive listing, it does provide a good idea of how to come up with a business plan. These include ideas like bakery products, tomato sauce manufacturing unit, computer assembling, paper napkins, dairy products, beauty parlor etc.

So What is the Process to avail this benefit ?

Step 1 : Identification of Business Idea

Step 2 : Selection of Business Category

Step 3 : Contact Nearest Public / Private sector bank where he/she can apply for business loan under PMMY.

Step 4 : Fill application and related documents

An application form under this scheme will be available with each of the above listed institutions. This application form has to be submitted along with the following documents for the approval of the loan,

  • Proof of Identity (Self attested Voter ID/Driving License/PAN Card/Aadhaar Card/Passport/any other Photo ID issued by Government)
  • Proof of Residence (Recent Telephone Bill/Electricity Bill/Property Tax Receipt (not older than 2 months)/Voter ID Card/Aadhaar Card/Passport/Domicile Certificate/Certificate Issued by a local authority)
  • Applicant’s recent photograph (not older than 6 months)
  • Quotation of Machinery/other items to be purchases
  • Name of the Supplier/Details of Machinery/Price of Machinery
  • Proof of Identity/Address of the Business Enterprise (relevant licenses & certificates)
  • Proof of Category (SC/ST/OBC/Minority etc)

Apart from the above mentioned documents, individual banks could ask for other documents as needed. The Banks are not supposed to take any processing fee and are not supposed to ask for any collateral. The repayment period is also extended to 5 years. But it is also made clear that the applicant should not be a defaulter to any Bank or financial institution.

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Who are eligible to give loan under this scheme ?

List of bank is available on Mudra Website which currently contains

  • 27 Public Sector Banks
  • 17 Private Sector Banks
  • 31 Regional Rural Banks (RRBs)
  • 4 Co-operative Banks
  • 36 Micro Finance Institutions (MFIs)
  • 25 Non Banking Financial Companies (NBFCs)

What is Mudra entity is about ?

Let me clear one thing that MUDRA is not a separate bank (like SBI / HDFC  etc). It is a government financing scheme to provide business loan to new small businesses in India.

To get business loan under PPMY the candidate has to contact the nearest Public/ Private sector bank. MUDRA will be operating as a refinancing institution through State / Regional level intermediaries. MUDRA’s delivery channel is conceived to be through the route of refinance primarily to NBFCs / MFIs, besides other intermediaries including Banks, Primary Lending Institutions etc.

The rate of interest will be fixed by the institutions time to time based on guidelines from the RBI.

What are additional benefits under this scheme ?

After the loan has been sanctioned under MUDRA Yojana, Every loan holder will be provided a Mudra Card, which is  a card like the credit card which the candidate can use to buy business raw material, etc.

This Mudra Card will have a limit of 10% of the business loan sanctioned to candidate or Rs. 10000 whichever is minimum for the case.

Mudra Card


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About the author

Harshad Patankar

My name is Harshad Patankar and I am the chief blogger at BumbleBeeHub Blog and where I like to share my internet/tech experience along with some fascinating updates around the Business, Technology, Education and Government sectos with my online readers on this website. You can read more about me at my About Page. You can follow me on Twitter, Facebook & Google