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AURIGA ACCOUNTING PRIVATE LIMITED what is minute book 2026 05 02T175354.594

MUDRA YOJANA

Small businesses in India often face challenges in accessing bank loans due to lack of collateral and limited financial resources to manage interest payments. To address this, the Government of India launched the Pradhan Mantri Mudra Yojana (PMMY) on 8th April 2015. The scheme is implemented through Micro Units Development and Refinance Agency (MUDRA Bank) to provide financial support to micro and small enterprises.

Under this scheme, micro-units can access collateral-free loans to support business growth and expansion.

Keep reading to understand more about PMMY, including:

  • Loan amounts available under Mudra Yojana
  • Eligible businesses under the scheme
  • Interest rates applicable on Mudra loans
  • Step-by-step application process for PMMY loans

Mudra Loan Features: Key Benefits and Highlights Explained

FeatureDetails
Scheme Name                                                     Pradhan Mantri Mudra Yojana (PMMY)
Benefits                                                                Low-interest loans for MSMEs and small businesses
Loan Amount                                                                    ₹50,000 to ₹20 lakh
Processing Fee                                         Shishu loans – Nil; Kishore & Tarun – as per lender norms
Repayment Period                                                  1 to 7 years (varies by lender)
Collateral RequirementNo collateral required
Official Website                                                           https://www.mudra.org.in/
Helpline Numbers                                               1800 180 1111, 1800 11 0001
Objectives of Pradhan Mantri Mudra Yojana (PMMY) Explained

The Pradhan Mantri Mudra Yojana was launched with several key objectives aimed at promoting financial inclusion and supporting the growth of small and micro enterprises in India.

The main objectives of the scheme include:

  • To set clear policy guidelines for financing micro and small enterprises.
  • To register and regulate Microfinance Institutions (MFIs) and other related entities.
  • To support the growth and expansion of small businesses across sectors.
  • To assist low-income groups in starting, developing, and scaling their business activities.
  • To improve access to affordable finance for unbanked and underbanked entrepreneurs, thereby reducing the cost of borrowing.
  • To encourage lending support to SC/ST entrepreneurs and promote inclusive growth.
  • To regulate Microfinance Institutions engaged in trading, manufacturing, and service-based activities.
Types of Mudra Loans Under Pradhan Mantri Mudra Yojana Explained

  • The Pradhan Mantri Mudra Yojana offers four categories of Mudra loans designed to support businesses at different stages of growth. Each category comes with specific loan limits to meet varying financial requirements of micro and small enterprises.

    • Shishu – Loans up to ₹50,000 for new or early-stage businesses.
    • Kishore – Loans ranging from ₹50,000 to ₹5,00,000 for growing businesses.
    • Tarun – Loans from ₹5,00,000 to ₹10,00,000 for established businesses looking to expand.
    • TarunPlus – Loans from ₹10,00,000 to ₹20,00,000 for advanced business expansion needs.
Mudra Loan Interest Rates Explained Under Pradhan Mantri Mudra Yojana

Under the Pradhan Mantri Mudra Yojana, the interest rate on Mudra loans is not fixed and varies from bank to bank. The applicable rate depends on the lender’s internal guidelines, the applicant’s credit profile, and overall repayment capacity. The loan tenure is also decided by the respective bank within scheme guidelines.

Below is an indicative list of interest rates and loan terms offered by different banks:

BankInterest Rate (p.a.)Loan AmountTenure
State Bank of India12.15%Up to ₹10 lakh5 to 7 years
HDFC BankAs per bank guidelinesUp to ₹10 lakhAs per bank policy
IDBI BankAs per bank guidelinesUp to ₹10 lakh1 to 5 years
ICICI Bank16.85%Up to ₹10 lakh1 to 5 years
UCO Bank9.60%Up to ₹10 lakhAs per bank policy
Bank of BarodaAs per bank guidelinesUp to ₹20 lakh1 to 7 years
Indian Overseas BankAs per bank guidelinesUp to ₹20 lakh1 to 5 years
Union Bank of IndiaAs per bank guidelinesUp to ₹10 lakh1 to 7 years
Canara BankAs per bank guidelinesUp to ₹10 lakh1 to 7 years

Nature of Assistance Under Pradhan Mantri Mudra Yojana Explained

Under the Pradhan Mantri Mudra Yojana, financial assistance is provided in the form of collateral-free loans to support various income-generating and business activities.

The loan can be used for the following purposes:

  • Purchase of commercial vehicles and transport vehicles
  • Working capital requirements for business operations
  • Investment in plant and machinery
  • Financing agri-allied and non-farm income-generating activities
  • Business loans for traders, shopkeepers, and vendors

Eligibility Criteria for Pradhan Mantri Mudra Yojana Explained

Eligible applicants under the Pradhan Mantri Mudra Yojana include a wide range of individuals and business entities engaged in income-generating activities.

The following are eligible to apply for Mudra loans:

  • Individuals
  • Proprietary concerns
  • Partnership firms
  • Private limited companies
  • Public companies
  • Other legal entities

Mudra loans are provided for non-farm income-generating businesses in sectors such as trading, manufacturing, and services, where the credit requirement is generally up to ₹10 lakh. The scheme also extends support to homestay businesses to promote employment-driven growth in the tourism sector.

Additionally, borrowers who have successfully repaid loans under the Tarun category are eligible to apply for higher funding under the TarunPlus category, which offers loans up to ₹20 lakh.

Sectors and Activities Covered Under Pradhan Mantri Mudra Yojana Explained

  • Transport and Logistics: Purchase of commercial vehicles such as auto-rickshaws, e-rickshaws, taxis, small goods carriers, and passenger transport vehicles. Tractors, power tillers, tractor trolleys, and two-wheelers used for commercial purposes are also eligible.
  • Service-Based Businesses: Salons, beauty parlours, gyms, tailoring shops, boutiques, dry cleaning units, courier services, repair shops (cycle and motorcycle), DTP centres, and photocopying services.
  • Food Processing and Small Manufacturing: Activities such as papad and pickle making, sweet shops, jam and jelly production, bakery units, ice-making, ice cream units, cold storage, bread and biscuit manufacturing, and small food stalls or catering services.
  • Textile and Handicrafts: Handloom, khadi and village industries, power loom operations, traditional dyeing and printing, embroidery, garment stitching, apparel design, and manufacturing of textile-based products like bags, vehicle accessories, and furnishing items.
  • Agriculture and Allied Activities: Beekeeping, poultry farming, dairy, livestock rearing, fishery, agro-processing, agri-clinics, agribusiness centres, and other allied agricultural services.

About the Author

Dakesh

Dakesh breaks down complex legal regulations into clear, practical guidance, helping entrepreneurs remain compliant while building sustainable and scalable businesses.

May 2, 2026

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May 2, 2026
January 8, 2026

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