e-Mudra Loan: Benefits, Documents and Steps to Apply

7 min read • Published 8 December 2022
Written by Prateek Agrawal
e-Mudra Loan: Benefits, Documents & Steps to Apply

Micro, Small, and Medium Enterprises (MSMEs) have played a significant part in the country’s development since the liberalization  of the Indian economy in the 1990s. They have consistently supported technological advancement, infrastructure growth, and the modernization of the country and our society as a whole. 

Large-scale industries have usually not had trouble obtaining loans for their businesses, as banks and other lending institutions have favoured  them for a long time. In contrast, MSMEs and non-corporates have always struggled to procure affordable credit.

The Pradhan Mantri Mudra Yojana (PMMY) provides a resort for financial assistance known as a Mudra loan (“MUDRA” Itself is an acronym that stands for “Micro-Units Development and Refinance Agency”). The Mudra scheme works towards generating credit for these MSME sectors and easing their ability to meet funds needed by them to operate. Borrowers in the Sishu, Kishor, and Tarun divisions can apply for business loans ranging from ₹50,000 to ₹10 lakh through this scheme. 

What is the Mudra Scheme?

Mudra offers to refinance programs  to banks and microfinance organizations. This plan, owned by the Small Industries Development Bank of India (SIDBI), offers banks and microfinancing institutions refinancing capabilities against loans made to small enterprises to stimulate the development of these micro-units. This scheme is primarily intended for MSME units around the country.

It was founded with the sole objective of supporting and protecting small businesses against exploitation by money lenders. Its goal is to stabilize  the Indian microfinance sector through widespread participation and regulation and offer loans to agencies and microfinance institutions. It also maintains a register of Microfinance Institutions (MFIs) and agencies.

What is an e-MUDRA Loan?

An e-Mudra loan is an unsecured business loan that businesses with financial requirements can obtain online. It provides funds of up to ₹10 lakh. You can use the money from an e-Mudra loan to start a business, expand it, or meet its working capital needs.

A variety of commercial and public sector banks offer e-Mudra loans. The PMMY and the Digital India program both include the e-Mudra loan initiative. The government started this scheme in 2015, intending to give financial assistance to small business owners and entrepreneurs.

Benefits of an e-Mudra Loan

  • Provides Finance: The loan plan provides finance to MSMEs in the manufacturing, commerce, and service sectors. These are our country’s primary income sources, which contribute a massive amount to India’s GDP.
  • Wide Cover: The credit facilities made available through the PMMY can be used for various purposes. You can use mudra loan credit to obtain term loans and overdraft facilities or to apply for letters of credit (for international trade) and bank guarantees.
  • No Collateral: The PMMY plan offers unsecured loans, i.e., no collateral is necessary when qualifying for a loan.
  • Loan Disbursement is Simple: Lending institutions, such as banks, non-banking financial companies (NBFCs), and microfinance organizations, have been directed to make loan disbursement as simple and quick as possible. 
  • Easy Documentation Process: Most small unit businesses lack the documentation to satisfy a bank’s requirements. The Mudra scheme’s simplified method addresses the issue that small units have had earlier, i.e., a lack of adequate documentary evidence. 

Special Documents Required to Obtain an e-Mudra Loan

When applying online for an e-Mudra loan, it is critical to have the following documents ready. The documents must be in JPEG, PNG, or PDF format and no larger than 2MB. You must submit photocopies or scanned copies of the following documents:

  • Udyog Aadhaar: In September 2015, the Ministry of Micro, Small, and Medium Enterprises issued Udyog Aadhaar, a twelve-digit unique identification number. It is sometimes referred to as “Aadhaar for business”.
  • GST Registration Certificate: A GST registration certificate is a legal document that proves you are registered under India’s GST law. Any firm in India with a turnover that exceeds the GST registration criteria must register.
  • Shop or Business Establishment Certificate: Every shop and the commercial institution must register their business as per the Shops And Establishment Act of their state within 30 days of opening the business. The certificate or shop licence is the business’s basic registration. This certificate is issued for them to avail of a variety of business licenses and registrations.
  • Any Other Business Registration Document: Other documents like Memorandum of Association (MoA), Articles of Association (AoA), Consent of Proposed Directors, Partnership Agreements, and Statutory Declaration might also be required, if applicable.

Eligibility Criteria for an e-Mudra Loan 

Following are the eligibility criteria for a business seeking an e-Mudra loan:

  • The applicant must be an Indian citizen and an entrepreneur, either as a sole proprietor or as part of a small partnership enterprise.
  • The applicant must be at least 18 years old and not older than 65 years old.
  • Both new and existing MSME firms can avail of the loan. 

Step-by-Step Process to Apply for An e-Mudra Loan

Save yourself the time and effort of traveling to the bank whenever you need a service. Try applying online instead. Below are the steps you must follow to apply for an e-Mudra loan:

Step 1: Go to the official website of any PMMY-approved financial institution or bank from which you want to get the Mudra loan. Download the appropriate form from the options available. 

Step 2: Download the loan application form (Shishu, Tarun, or Kishore) that you need, and fill in personal and business information such as your name, date of birth, residential/business address, and educational qualifications. 

Step 3: Finally, when submitting the application form to the bank or lending organization, ensure you have attached all necessary document, as mentioned in the article earlier.

Step 4: After the Mudra loan application form and any supporting documents have been reviewed and validated by the concerned authorities, the loan will be approved and deposited into your bank account, generally within 3 to 4 working days. 


While running a firm, an entrepreneur may need additional finances. The Mudra scheme provides an ideal opportunity to attain the same. Both online and offline ways of application are available, and you could go ahead at your convenience. The Mudra loan application form is identical for the Shishu and Kishor loan schemes, but it is distinct for those applying for the Tarun loan program.

Furthermore, to create creditworthiness for future needs and make it easier to obtain more funds when needed, you should keep the repayment track record clean.  If any grievance is faced, you can present a written letter with full details of your complaint during working hours at Mudra’s Customer Service Cell (CSC), located in its corporate office. 

Frequently Asked Questions (FAQs)

For what purposes can I use the funds from a Mudra loan?

Borrowed funds can be utilised for various commercial purposes, such as purchasing equipment, working capital and for purchasing machinery for use in the business. You can also utilise the PMMY loan for geographical development or brand promotion.

What is the maximum loan amount under the Mudra scheme?

The maximum loan amount is ₹10 lakh under the Tarun category.

Can I obtain a Mudra loan for my agro business?

Yes, under the PMMY, loans are available for activities related to businesses like agri-clinics and agribusiness centres, food and agro-processing units, poultry farming, pisciculture, beekeeping, sorting, livestock-rearing, grading, aggregation agro industries, diary, fisheries, and so on.

What is a Mudra card?

A Mudra card is a type of debit card offered to Mudra loan borrowers to meet their day-to-day business needs. Post Mudra loan approval, the lender establishes a Mudra loan account for the borrower and issues a debit card. The loan amount is deposited into your bank account.

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Prateek Agrawal

Investment Principal
Prateek is an investment professional with a demonstrated history of working in Debt Capital Markets and wholesale funding to the Corporates. He has more than 9 years of experience in Treasury and Wholesale lending to more than 50 Institutions across India. He is currently working as an Investments Principal at Wint Wealth.

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