The Pradhan Mantri Mudra Yojana or PMMY is a flagship scheme of the Government of India to extend affordable credit to micro and small enterprises.
Mudra loans are designed to bring enterprises into the formal financial system, or to “fund the unfunded”. Loans under PMMY scheme are available to non-farm micro or small enterprises engaged in income generation through manufacturing, trading and services. Enterprises involved in allied agricultural activities can also apply for Mudra loans.
- The Mudra loan scheme offers credit facilities to micro and small enterprises engaged in income generation.
- One of the key benefits of a Mudra loan is that borrowers are not required to provide security or collateral. Additionally, there are no processing charges on Mudra loans.
- The credit facilities extended under the PMMY can be for any type of fund or non-fund based requirements. Hence, borrowers can use the Mudra loan scheme for a variety of purposes. The credit from Mudra loans can be used for term loans and overdraft facilities, or to apply for letters of credit and bank guarantees.
- There is no minimum loan amount for Mudra loans.
There are three types of Mudra loans depending on the loan amount:
- Shishu : Loans sanctioned under the PMMY scheme up to Rs.50000
- Kishore : Loans sanctioned under the PMMY scheme from Rs.50001 up to Rs.5.00 lakh
- Tarun : Loans sanctioned under the PMMY scheme Rs.5,00,001 up to Rs.10.00 lakh
- While there is no minimum loan amount under the Mudra loan scheme, the maximum loan amount that can be taken under the PMMY is Rs.10 lakh.
- Borrowers don’t need to pay processing charges or offer collateral if they avail a Mudra loan
- As per the PMMY scheme, the Mudra loan can not only be offered to enterprises in the non-farm sector but also can include those engaged in allied agricultural activities, such as horticulture and fisheries.
- The interest rate on Mudra loans is determined by the Marginal Cost of Lending Rate or MCLR, which is calculated according to the RBI guidelines
- All “Non farm enterprises”
- under “Micro Enterprises” and “Small Enterprises” segment
- engaged in “income generating activities”
- whose “credit needs are up to Rs.10.00 lacs”
- Now allied agriculture activities have also been included under PMMY scheme w.e.f. 01.04.2016.