Mudra Loan – Pradhan Mantri Mudra Yojana (PMMY) – Fulfilling Dreams of Millions


Employing more than 1.25 billion people, NSSO revealed that there are more than 5 billion small enterprises that need financial assistance. However, financing for new entrepreneurs is always a challenge. Fortunately, many young entrepreneurs have fulfilled their dreams of running a business successfully owing to the Pradhan Mantri Mudra Yojana.

What is Mudra Loan?

The Prime Minister of India launched the Pradhan Mantri Mudra Yojana (PMMY) on 8th April 2015. The Pradhan Mantri Mudra Yojana scheme falls under Micro Units Development and Refinance Agency, hence the name, Mudra. This department deals with refinancing and development requirements for micro and small enterprises in the non-corporate sector and non-farming sector. Offered as a part of PMMY, the Mudra Loan allows eligible applicants to avail loans up to ₹10 lac.

Objectives of the PM Mudra Loan

Following are some of the objectives of the PM Mudra Yojana (PMMY):

  1. Building a reliable credit delivery system and framework.
  2. Establishing stability in the economic sector of India by regulating borrowers and lenders for businesses
  3. Reaching out to microfinance institutions that lend money to individuals and small businesses
  4. Registering and accrediting all the microfinance institutions in India
  5. Developing standard contracts that act as a spine of businesses in the future
  6. Providing standard guidelines to follow in order to avoid failure of new businesses
  7. Introducing new techniques to keep disbursement in check

Categories of PMMY

The Mudra Yojana offers three kinds of loans:

  1. Shishu loans up to ₹50,000 to individuals in the budding stage of businesses
  2. Kishor loans up to ₹5 lac to for expansion of established businesses
  3. Tarun loansup to ₹10 lac to businesses that are fully established


Characteristics of the Pradhan Mantri Mudra Yojana (PMMY)

The mudra loan is one of the best-in-class schemes provided by the Government of India. It has the following features:

  • Utilization for an extensive range of purposes like purchasing machinery, renovating business premises, business expansion, and so on.
  • Applicable to existing as well new applicants
  • The Pradhan Mantri Mudra Yojana targets not only the businesses involved in providing services but also allied agricultural groups
  • Repayment tenure of 3-5 years after receiving the loan

Eligibility of Mudra loan

Specifically, the mudra loan is meant for small businesses across India. You are eligible for the PMMY scheme if you clear the mudra loan eligibility criteria i.e. if you are an artisan, small manufacturer, shopkeeper, fruit and vegetable vendor or an individual occupied in agriculture. Further, the loan cannot be taken for any educational purpose, to buy land or build houses. However, to purchase a vehicle to be used in your startup, you can apply for a mudra loan.

How to apply for PM Mudra Yojana?

You can contact your nearest private or public sector bank once you finalize your business plan. It is recommended that you approach the bank where you already have a current bank account. After explaining your business plan to the bank, you will be required to fill up the Mudra loan application form. You are expected to carry the invoice for any equipment that you’ll require for your business. Mudra loans do not demand any collateral. Further, if you have a good credit score, the application process will be easier for you.

Documents required

There are different types of mudra loans that require different documents. They are as follows.

Rural Business Credit & Business Loans Group

  • Income Tax return of the past 2 years
  • Mudra application form
  • Age proof
  • Address proof
  • Business Instalment Loan (BIL) or RBC (Rural Business Credit) application
  • Bank Statement for the past 12 months
  • Business vintage proof

Vehicle loans

  • Loan application form
  • Mudra application form
  • Income proof
  • 2 color photographs (passport size)
  • Address proof
  • Bank statement of the past 6 months

Business Instalment Loan

  • Income Tax return of the past 2 years
  • BIL application for business loan
  • CA certified financials
  • Address proof
  • Bank Statement for the past 6 months
  • Business qualification, continuity and establishment proof
  • Proof of residence or office ownership
  • Trade references

Mudra Card

At the time of disbursing the loan, you will be given a card that resembles a credit card. You can use this card to buy raw materials or other equipment from registered vendors. The credit limit of this mudra card is capped at 20% of the approved loan, with a maximum at ₹10,000.


With its increasing popularity, the Mudra loan is a highly sought out option for business loans. You too can take the first step towards growing your business. If you do not fulfill the criteria for applying for a Mudra loan or you need a loan for more than ₹10 lac, you have the option of the Bajaj Finserv Business Loan on Finserv MARKETS. Here, you get the benefit of flexible loan repayment tenures and competitive interest rates with loan amounts of up to ₹30 lac. Opt for a business loan on Finserv MARKETS now to meet your entrepreneurial goals.