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Medium and small businesses are often incapable of availing loans from banking institutions due to lack of security and inadequate funds for paying off the interest. Helping these businesses grow would ultimately lead to the advancement of the economy.
Mudra Yojana is a financial initiative for facilitating micro-units and providing them with sufficient funds to help them develop their business. Under the Jan Dhan Yojana, the government launched its MUDRA Bank (Micro Units Development and Refinance Agency) initiative on 8th April 2015.
The inception of Mudra Yojana was done keeping in mind several objectives to be fulfilled during the implementation of this yojana. The most prominent of these are:
As per the choices for financing available under this scheme, the loan limits and interest rates vary for accommodating for the growth phase of the respective business availing such loan. The applicable limits and rates are as follows:
Overall 27 Public Sector Banks, 31 Regional Rural Banks, 17 Private Sector Banks, 36 Microfinance Institutions, 25 Non-Banking Financial Institutions and 4 Co-operative banks have been selected for disbursing this loan as of now. 60 per cent of the loans under the scheme to be offered via ‘Shishu’ option and the remaining 40 per cent would be via ‘Kishore’ and ‘Tarun’ schemes.
The loans under this scheme could be availed for the purposes listed below:
Loans would be provided to all the non-farm income-generating businesses in trading, manufacturing and services whose credit requirements are less than Rs.10 lakhs by all Public Sector Banks, State Cooperative Banks, Regional Rural Banks and Urban Co-operative Banks would be known as Mudra loans under the PMMY (Pradhan Mantri Mudra Yojana).
Basically, all those who want to avail loans below Rs.10 lakhs for micro units are qualified for such loan. An application form under the scheme would be available with each of the above-mentioned institutions. This application form needs to be submitted together with the documents listed below:
Apart from the documents mentioned above, applicants’ banks might ask for other documents as required. The Banks should not charge any processing fee and aren’t supposed to request any collateral. The loan repayment period is extended to 5 years. However, it is made clear that any applicant shouldn’t be a defaulter to any financial institution.
The following is an illustrative list of business activities and services that are eligible for obtaining Mudra loans:
The finance minister in the Budget 2016-2017 set a target of advancing INR 1.22 lakh crores under the Mudra Yojana to help to support and to revive the MSMEs. This lending target was not only achieved but was actual overran by a big margin. Consequently, in light of the erstwhile success, the union government decided to double the lending target under the Mudra yojana. It means that the target would be INR 2.44 lakh crores.
The Finance Minister said that though the target for lending is scaled up, the key targets would be women, backward classes, minorities, Dalits and Tribals who have been usually not provided the adequate opportunity of getting finances for their businesses.
|Bank||Interest Rate||Processing Fee||Loan Amount||Tenure|
|State Bank of India||9.75% onwards||As per the applicant’s profile||Maximum Rs.10 lakh||1 to 5 years|
|Bank of Baroda||9.65% onwards||Nil||Maximum Rs.10 lakh||1 to 5 years|
|Oriental Bank of Commerce||8.15% onwards||As per the applicant’s profile||Maximum Rs.10 lakh||1 to 5 years|