Initiated in 2015 by the NDA government, the Pradhan Mantri Micro Units Development and Refinance Agency Yojana primarily aim at extending financial help to the small and medium business sector, including non-farm and non-corporate companies. They are struggling for the financial aid necessary to begin and grow their business.

The Reserve Bank of India has fixed the Business Loan interest rates to the base rate for the commercial banks to take a Loan to disburse money to the micro-units. The interest rate depends on the borrower’s credit history, profile, business requirements, and guidelines laid down by the RBI.

Interest rates

Under Shishu, the interest rates range from 1% to 12%. Under Kishor, the range is 8% to 12%, whereas, under Tarun, it is 11% to 20%. The businesses eligible for the PM MUDRA Loan include non-farm small enterprises, non-corporate small businesses, shopkeepers, food service units, fruit and vegetable vendors, and small manufacturing units.

Eligibility criteria

Mudra Loans offer credit to non-farm enterprises in trading, manufacturing, and services. Their credit needs are below Rs. 10 lakh. Depending on the stage of development and growth of the micro-unit, you can apply for Loans under Shishu, Kishor, and Tarun categories. Shishu offers a maximum amount of Rs. 50,000, whereas Kishor and Tarun have upper limits of Rs. 5 lakh and Rs. 10 lakh respectively.

Documentation

The documents required for applying for these Loans are valid photo identity proof, current address proof, proof of income, latest ITR documents, last 6 months’ bank statements, Loan application form, ownership proof of residence, proof of business continuity, and trade references.

How to apply for it?

Eligible applicants can apply for the scheme after comparing the Business Loan interest rates and eligibility criteria. Download the application form, fill in the details as requested, and attach the relevant documents. Submit the form to the bank and remember your Reference ID. After verification, the bank approves and disburses the amount to your Bank Account.

As per the RBI guidelines, a MUDRA Loan is offered at a reasonable interest rate depending on the applicant’s requirements and profile.

How to check the status?

All banks offer online facilities to check the Mudra Loan status. However, to be eligible for it, you should have a clean repayment record without defaulting on previous Loan repayments. You cannot use the amount for personal needs, and you must have a genuine business plan before applying for them.

Final words

These Loans are available from commercial, cooperative, small finance banks, and non-banking financial companies. You can also apply for them online through the PMMY or bank website, or visit the branch to get your Loan application form.