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In this article, Leepakshi Rajpal discusses how to get MUDRA Loan under the Pradhan Mantri Mudra Yojana‎.

Introduction

Pradhan Mantri Yojana is offering support to the businessmen who have a small amount of capital and want to grow in their future. Do you own a small business and want to have a sufficient amount of luxury in life or they may be necessities too. Do you understand that you are really a small businessman and you will not be able to grow in your business without a strong financial backing, then this yojana is for you as it is claimed by the government? The point to be noted here is that the yojana is available in the form of the loan and not in the form of economic aid. Therefore, under this scheme what is required is the funding which will be made by the government but on a condition that it will be a loan and not a free fund to the small businesses.

Pradhan Mantri Mudra Yojana

Pradhan Mantri Mudra Yojana helps small businessmen who have the potential and the ability to grow big but the only thing in which they lack is the financial support, therefore this yojana or scheme helps in creating more and more financial support from the government to these small businessmen. These small businessmen are otherwise, left to the scrutiny of the market and are not included in the economic market of the country and hence, this scheme is introduced to help aid such businessmen of small nature.

MUDRA or Micro Units Development and Refinance Agency Limited is an institution set up by the government of India for development and refinancing activities relating to micro units. MUDRA was announced by the Hon’ble Finance Minister Shri Arun Jaitley in the 2016 budget. Under MUDRA, loans are provided under three schemes namely ‘Shishu’,’Kishor’ and ‘Tarun’ to signify the stage of growth and funding needs of the beneficiary micro unit. This loan can be availed by Micro Units and Entrepreneurs in India. It is a kind of SME loan that is talked about in this article https://blog.ipleaders.in/documents-required-getting-sme-loan-bank/, and it helps the small and medium based enterprises and also businesses to engage and enlarge themselves into something big.

The credit flow in the sector of small businesses and medium enterprises, is not regulated at a predictable level and therefore, when this MUDRA scheme aims to provide the loan to the businessmen, it aims at increasing and enhancing the credit flow in this sector so that not only the businessmen but the sector itself gains importance and an economic push is given forthwith this scheme. So, are you interested in getting a MUDRA Loan or interested in knowing about it in detail? Let us look at it in more detail.

MUDRA Loan

When you know that yours is a small firm or a firm with a low capital, then you must be engaged into thinking what would take you a long way and provide you somewhere near to the life you always wanted. Well, MUDRA may be one of that but before that let us look why this can be the reason for your growth.

One of the biggest loopholes in the SME sector or the small and the medium enterprise sector is the lack of financial support from the formal banking or financial sector. The lack of formal financing hampers the growth of the small businesses and limits them to the range of the few capital requirements because of which they get limited to that scope only and are not able to analyze their growth with the help of the financial support. When they do not imagine themselves big and somewhere they wanted to be, the creativity in them is hampered to the extent of them not imagining themselves as big and successful entrepreneurs of the town and this hampers them from becoming big. This is to remove this bottleneck that the government is providing financial aid to these small businessmen or Entrepreneurs to raise themselves up with not only the financial abilities and capabilities but also the intellectual property.

To remove these impasses from the lack of creativity and hindrance on the economy, the government has taken an initiative in the form of the MUDRA loan that helps these entrepreneurs to take up the loan and think big in their lives without pondering about what could stop them because it is for them that this loan has been designed, and therefore their interests have been kept prior and therefore, there is no point that these companies, business or entrepreneurs still face such hinderance on the point of financial incapability. The MUDRA bank that has been set up is a subsidiary of the SIDBI which means it has been given more priority over the SIDBI bank.

MUDRA is said to have been responsible for the refinancing all the financiers or financial institutions or financial institutions engaged in financing small businesses, societies, trusts, section 8 companies, co-operative societies, small banks, scheduled commercial banks and rural banks which are in the business of lending to micro or small businesses engaged in the manufacturing, trading and services activities.

How to get Mudra Loan

Are you thinking to get a Mudra Loan? The Mudra loan will be available for the following:-

  1. For all the eligible beneficiaries of the MUDRA Loans under the Pradhan Mantri Mudra Yojana
  2. Maximum Limit of cash withdrawn is Rs.25,000 per day in ATM
  3. The maximum amount that can be withdrawn per day is Rs. 25000 in POS
  4. Personalized card in the name of the firm
  5. Presently magstripe card will be issued.
  6. Insurance Coverage Rs.1 Lac as applicable to “RuPay Card”
  7. Transaction Charges are applicable from 1t transaction onwards.

Procedure for getting MUDRA loan

Now that you know, you want to get a MUDRA loan and you also qualify for it, let us get into the procedures involved in getting the loan. To obtain a MUDRA loan the borrower can approach the branch of the bank or the financial institution of the country that provides for the MUDRA loan with the following documents and information. So here is the step by step procedure for getting the MUDRA loan.

Fill in the MUDRA loan application- You have to fill in the application form for being eligible for the loan. Provide your details and make sure you have filled them all with utmost care and responsibility.

  1. Business plan- You must have a business plan and that must be towards growth and innovation both of the business and the economy.
  2. Proof of Identity like PAN, Aadhaar, Driving License, Passport and more.
  3. Residence proof like recent telephone bill, electricity bill or property tax receipt and more
  4. Applicant’s recent photograph which is less than six months old.
  5. Quotation of machinery or other items to be purchased
  6. Name of the supplier or details of the machinery or prices of the machinery
  7. Proof of the Identity and Address of Business like the tax registration, business license and more
  8. Proof of category like SC/OBC/Minority, if applicable

It is important to note that there is no processing fees or collateral requirement for obtaining MUDRA loan.

Various banks and their Mudra Loan processes

SBI Bank SBI bank is the most trusted government bank. As the step of Mudra loan is taken by the government for empowering the small and the medium business sections, the loan will be given at a low rate of interest. Any loan is not more than Rs.50,000, the bank will not charge any processing fee from the person. For a loan that amounts to anything between 50,001 to 10 lakhs, the bank will charge a processing fee of 0.50% of the total amount borrowed.

Under the Scheme, the person will not have to keep anything as a collateral safekeeping. All these things have made the scheme very popular among the business owners who fall in the small amount to the medium sectors.

The Rate of Interest -The rate of interest on the normal business loans depends on many factors. To start with, the bank will charge low rates if the business is operational for a long tenure. If the amount of loan taken is less than the rate of interest charged is also less. If the EMI per month is significantly bigger than the rate of interest will be less. But this is not the case for the credits taken under the Mudra scheme. Here, the rate of interest will remain the same no matter what the amount the candidate is applying for. The rate of interest is not subjected to any change in depending upon the EMI, time duration and so on.

The repayment period- For the normal business loans, the term for repaying the credit amount depends on the EMI and the loan amount. If the EMI is less than the candidate will have to opt for the long-term repayment tenure. For the loans taken under the Mudra scheme, the term for the repayment of the credit card is fixed. The candidate will have to pay up the entire credit and be free from the burdens of credits within a period of 5 years only.

Punjab National Bank – The rate of interest applicable to the MSME units is in the range of the MCLR to MCLR+2.25% interest rate which is subject to change as per the government or the Reserve Bank of India guidelines, issued from time to time.

Andhra Bank- In Andhra bank, there is no collateral required for taking the loan. The rate of interest is applicable as per the extant guidelines. MCLR+1.80% p.a.+TP* which is currently 0.25% is applicable for TVs with repayment period (including gestation period) above 36 months and up to 60 months and 0.50% for TLs with repayment period (including gestation period) of above 60 months.

Bank of Baroda- One of the main features of the Bank of Baroda Mudra loan is that any type of fund based or non-fund based facility and there is no minimum amount and the maximum amount is Rs.10 Lakhs. No collateral security is required to take the loan.

The rate of Interest differs at different levels regarding the loan. It is mentioned below.

Up to Rs.50000/- MCLR+SP (MCLR+SP)+0.50%
Above Rs.50000/- to Rs.2.00 lacs (MCLR+SP)+0.50% (MCLR+SP)+0.70%
Above Rs.2.00 lacs to Rs.10.00 lacs (MCLR+SP)+0.70% (MCLR+SP)+0.85%

There are no processing charges for the same.

Bank of India-  The eligibility criteria includes individual be it women, proprietary concern, partnership firm, private limited company or any other entity is an eligible applicant under the Pradhan Mantri Mudra Yojana loans.

The security that is required is divided into two parts, i.e. the primary security is the hypothecation of all the assets acquired out of the bank finance and personal guarantee of the promoters and the director. No collateral security is required. All eligible activity would be covered under the guarantee cover of the NCGTC under the ‘credit guarantee fund for micro units. The rate of Interest is as prescribed by the bank from time to time linked to MCLR. The processing fees are also according to the extant guidelines of the Bank.

Repayment

When it comes to repaying the loan, the term loan is to be repaid in suitable installments with suitable moratorium period as per cash flow of the business. The limit of the OD and CC limit will be repayable on demand. The renewal and the annual review is done as per the internal guidelines of the Bank.

Loan Under the MUDRA Scheme

Now, that you know the loan is provided to the small and the medium enterprises in the MUDRA scheme or the Pradhan Mantri Yojana, you must be wondering as to what amount of loan will be available to what firm or is the loan provided on the basis of the future of the business or what is the amount that this scheme offers for the business to grow itself.

The answer is mentioned below:-

There are three schemes under this main scheme, and the price range for the different scheme varies from enterprise to enterprise.

  • Under the Shishu scheme, you can get a loan of up to fifty thousand rupees or equal to fifty thousand rupees.
  • Under the Kishor Scheme, you can get a loan of above fifty thousand rupees to five lakh rupees.
  • Under the Tarun scheme, the enterprise can get anywhere ranging from five lakh rupees to ten lakh rupees.

What is the eligibility to get a Mudra loan?

Now that you know what is the amount that is provided through different schemes, you must be wondering about what will make you eligible for the same and how can your business be enrolled in an opportunity like this.

The following are the eligibility criteria for obtaining the MUDRA loan:-

  • An Indian Citizen
  • The citizen has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading or service sector.
  • Whose credit need is less than Rs10 lakhs.
  • Approach either a bank, MFI, or NBFC for availing of MUDRA loans under the scheme.
  • The lending rates would be as per RBI guidelines.
  • The terms and conditions of the lender would have to be followed for availing the loans under MUDRA.
  • They should know that MUDRA will not fund directly, instead, they would fund through existing NBFCs, financial institutions, Bank, Primary Lending Institutions, etc.
  • The target audience is the proprietary /partnership firms running a small manufacturing unit like shopkeepers, fruits and vegetable sellers, vendors, truck operators, food service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.

Purpose of assistance

The purpose for assistance is for the people who need a term based loan or composite loan to eligible borrowers for acquiring capital assets and working capital or marketing related requirements. The MUDRA loans are provided for income generating small business activity in manufacturing, processing, service sector or trading. The project cost is decided according to the business plan and the investment proposed. MUDRA loan is not for consumption or personal needs but for the business needs.

Tenure of Assistance

The tenure of financial assistance through the MUDRA loan is the based on the economic life of the assets created and also the cash flow which is generated. However, the MUDRA loan refinances assistance will be for a maximum tenor of thirty-six months which will also be aligned to terms of allotment of MUDRA funds by Reserve Bank Of India from time to time.

Banks Providing MUDRA Loan

Top 10 Public Sector Banks providing MUDRA Loan (as per total number of accounts as on October 11, 2015)

  1. UCO Bank – 4,79,476 MUDRA Loan Accounts
  2. State Bank of India – 4,67,062
  3. Canara Bank – 3,35,270
  4. Bank of India – 2,73,784
  5. Syndicate Bank – 2,14,228
  6. Indian Bank – 1,90,129
  7. Punjab National Bank – 1,83,594
  8. Bank of Baroda – 1,20,010
  9. Central Bank of India – 1,11,820
  10. Allahabad Bank – 1,10,044

Top 10 Private Sector Banks providing MUDRA Loan (as per total number of accounts as on October 11, 2015)

  1. HDFC Bank – 5,57,41, MUDRA Loan Accounts
  2. IndusInd Bank – 4,95,954
  3. Axis Bank – 4,36,323
  4. ICICI Bank – 34,311
  5. Ratnakar Bank – 28,408
  6. Yes Bank – 9,627
  7. Karnataka Bank – 4,958
  8. Karur Vysya Bank – 3,222
  9. South Indian Bank – 2,368
  10. Lakshmi Vilas Bank – 1,449

Top 10 Regional Rural Banks providing MUDRA Loan (as per total number of accounts as on October 11, 2015)

  1. Uttar Bihar Gramin Bank – 1,11,509 MUDRA Loan Accounts
  2. Pragathi Krishna Gramin Bank – 70,892
  3. Karnataka Vikas Grameena Bank – 46,549
  4. Kerala Gramin Bank – 44,525
  5. Madhya Bihar Gramin Bank – 34,928
  6. Baroda UP Gramin Bank – 32,743
  7. Baroda Rajasthan Ksethriya Gramin Bank – 29,913
  8. Andhra Pragathi Gramin Bank – 24,834
  9. Pallavan Grama Bank – 22926
  10. Allahabad UP Gramin Bank – 22,618

https://www.indiafilings.com/learn/how-to-get-mudra-loan/ visit this link for more details.

Where to File a Complaint Regarding the MUDRA Loan

A lot of people generally enquire about where to a complaint regarding the MUDRA loan scheme. There can be so many issues one might want to complain about so, this article not only provides you with the details but also with the helpline numbers where you can complain about the MUDRA loan.

  1. 1800 180 1111
  2. 1800 11 0001

Please note that this is a national helpline number and is toll-free. You have to tell them each and every detail about the complaint and it will get resolved.

Conclusion

Now, that you know what is the criterion for applying for MUDRA loan and other details, do know that this is the beginning and you can grow as much as you want with the MUDRA loan. The only thing I found to be conspicuous about is that it says that the small businessmen such as the fruit and the vegetable sellers and common man, they cannot have address of business like the tax registration and other documents, so in such a case how does the MUDRA loan provide for the financial assistance to these people. This is a crucial thought to be pondered upon.

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