Know Facts About Pradhan Mantri MUDRA Yojana (PMMY)-Apply For MUDRA Bank Loan?

Pradhan Mantri MUDRA Yojana (PMMY) is a strategy established by the Hon'ble Prime Minister on April 8, 2015 for providing loans upto 10 lakh to the non-corporate, non-farm small/micro enterprises. These loans are classified as MUDRA loans under PMMY. These loans are given by Commercial Banks, RRBs, Small Finance Banks, Cooperative Banks, MFIs and NBFCs. The borrower may approach any of those lending institutions mentioned previously or may apply online through this portal. Under the aegis of PMMY, MUDRA has generated three products specifically'Shishu','Kishore' and'Tarun' to signify the phase of growth / development and financing needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next stage of graduation / expansion. The loan limits under the three goods are given under

Know Facts About Pradhan Mantri MUDRA Yojana (PMMY)

What's MUDRA?

MUDRA (Micro Units Development and Refinance Agency) provides integrated financial aid to the micro enterprises sector including small manufacturing components, food service units and compact businesses to name a few. The fundamental motive of establishing MUDRA would be to expand the centre of institutional finance to small business entities involved in trading, manufacturing and service industries.

The MUDRA Loan strategy was suggested with the purpose of including business people comprising NCSBS (Non-Corporate Small Business Sector) and'own account enterprises' to the formal banking system. Typically NCSBS in India includes street vendors, repair shop owners, small scale businesses and artisans. These little companies many of which are informal in nature, provide employment to approximately 10 crore Indians.

Must-Know Facts About Pradhan Mantri MUDRA Yojana (PMMY)

The following are some of the key features and characteristics of the Pradhan Mantri MUDRA Yojana:

Loan amount offered- The strategy has three categories under which loans have been disbursed:

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• Shishu -- For loan amount up to Rs. 50,000
• Kishor --For loan amount from Rs. 50,001- Rs 5 lakh
• Tarun -- For loan amount over 5 lakhs and up to Rs 10 lakh

Who can borrow- Any businessperson or company who/which hasn't been a defaulter on any loan repayment before is eligible to borrow under the PMMY (Pradhan Mantri MUDRA Yojana). Thus individual small business owner, private limited companies, public sector companies, proprietary companies or any other legal business entity can apply for the Mudra loan.

Purpose of Loan assistance- As MUDRA loan is a company loan, the amount of the loan can't be used for private needs. It's provided to small companies that carry out particular activities in the production, trading or services sectors. Businesses can use the capital obtained from a MUDRA loan for promotion purposes, increasing the available working capital or for acquiring capital assets to grow the organization.

Interest rates-- Loans under the MUDRA Scheme are offered with nominal rates of interest and vary depending on the quantum of loan sanctioned. As per present interest rate standards from November 2015 onwards, these are the applicable rates:

Shishu: Shishu loans can be availed as much as the maximum limitation of Rs. 50,000
Kishor: PMMY loans exceeding Rs. 50,000 and up to Rs. 5 lakh are designated as Kishor loan and in these circumstances, the interest rate will tend to change depending upon the lender sanctioning the loan and the credit worthiness of the debtor
Tarun: Tarun loans are the ones which feature PMMY borrowings in excess of Rs. 5 lakh and up to the highest limitation of Rs. 10 lakh as per the scheme. The rate of interest related to these loans varies on a case to case basis
Verify: Mudra Loan Interest Rate of Top Banks

Maximum Tenure -- According to existing rules of this PMMY, the maximum repayment period for a MUDRA loan may extend to five decades, but the repayment period can be shorter, if the creditor determines so when sanctioning the loan.

Key Kinds of Pradhan Mantri MUDRA Yojana (PMMY) Offerings
MUDRA Yojana has a fragrance of supplies. The Substantial few include --

Micro Credit Scheme -- Under this scheme, financial aid is extended through Micro Financial Institutions (MFIs) so that they can offer business loans of up to Rs. 1 lakh. Typically the manner of delivery of these loans could include people engaged in particular micro enterprise activities, as well various joint liability groups (JLGs) and self-help groups (SHGs).
Women Enterprise Programme (Mahila Uddyami Yojana) -- This strategy is an important part of MUDRA Yojana targeted specifically at women entrepreneurs. It's intended to encourage individual women entrepreneurs, women's Joint Liability Groups and Self-Help Groups to set up different micro businesses. Special concessions could be afforded in such instances for example decrease in interest rates of up to 0.25percent on loans granted.
Refinance strategy for Banks -- MUDRA allows banks such as Scheduled Co-operatives Banks, Regional Rural Banks and business banks to refinance loan amounts (up to Rs 10 lakhs per unit). The refinance facility is available only if these business loans are extended for micro enterprise activities. Banks eligible for availing the refinance facility have to comply with requirements which are advised from time to time.
Mudra Card -- MUDRA card is an innovative credit product that makes credit readily accessible to small business while providing flexibility to the card owner. It can be utilised as a credit card with overdraft (loan) limitation and may also be utilised as a debit card with the center of ATM withdrawals. The Mudra Card can be used by companies to get working capital under its unique cash-credit arrangement.
Credit Guarantee Fund -- Also called the portfolio credit guarantee, this requires the creation and use of a particular fund called the Credit Guarantee Fund for Micro Units (CGFMU). This fund is managed by the National Credit Guarantee Trustee Company Ltd. and allows eligible entities to get micro loans effortlessly.
Equipment Finance Scheme -- This strategy as part of this MUDRA Loan scheme empowers small entrepreneurs and micro units to avail a loan to fund the purchase/upgrade of qualifying equipment/machinery. This motivates the businesses to improve their production methods to improve overall productivity and efficiency of their enterprise.
Charge to Micro Enterprises -- One of the fundamental reasons of MUDRA is to increase the quantum of benefits and the number of beneficiaries from the strategy. A large proportion of India's population is presently involved in specific sectors such as but not limited to land transportation, food manufacturing, textile manufacturing and community services. To satisfy the growth requirements of the businesses, various tailor-made products and schemes were and are being launched as a way to assist micro enterprises succeed and flourish.

What is in it for the banks ?

It's clear that the MUDRA scheme can benefit modest businesses operating in India and work as a driver for the nation's development. However, this strategy helps banks i.e. the creditor also. Any security used to offer the MUDRA loan is going to be held by the creditor so their risk is reduced. Furthermore, any advantage made using the loan will also be hypothecated to the creditor

The supply of Credit Guarantee Fund trust for Micro and Small Enterprises (CGTMSE) protects the lender when the borrower fails to cover their obligations as a result of incurring a company loss
The lender may also request DPN (Demand Promissory Note) that is a written note of guarantee made by the borrower to pay back the loan amount on the agreed interest rate
Must Read: Documents Needed for Mudra Loan

Achievements Under PMMY in Financial Year: 2019-2020

• No. Of PMMY Loans Sanctioned 19915239 *
• Number Sanctioned Rs. 104200.32 CRORE *
• Amount Disbursed Rs. 99968.85 CRORE *
• Above data is last updated on: 3/10/2019

Achievements Under PMMY in Financial Year: 2018-2019

• No. Of PMMY Loans Sanctioned 59870318
• Number Sanctioned Rs. 321722.79 CRORE
• Amount Disbursed Rs. 311811.38 CRORE

Overall, the MUDRA strategy has basically built a terrific infrastructure for last-mile credit delivery, thus supporting development and promotional activities. It's laid down financial practices which will guarantee client protection and will be helpful in micro industries farther.

How to apply for Pradhan Mantri MUDRA Yojana bank loan?

• Applicants should visit their nearest commercial or private bank
• Put forth the business idea/plan
• Submit duly filled loan application form
• Additional documents to be submitted- Identity proof, address proof, company address proof, company identity proof, caste certificate, balance sheets, IT returns, sales tax returns of the last three years, and other machinery details
• Complete all further formalities and procedures by the bank
• Submitted documents will be verified
• Loan will then get sanctioned

Releted schemes :

• Kalyana Laxmi {Scheme}
•  Chenetha Lakshmi scheme 
• Grama Jyothi Scheme
• Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)