What is a Mudra Loan and How To Check Your Mudra Loan Status?
The launch of the Pradhan Mantri Mudra Yojana (PMMY) was to encourage the development of non-corporate, non-farm small or micro-enterprises and to stimulate the spirit of entrepreneurship in India. Between 2015 and 2020, the PMMY scheme benefited over 24 crore loan accounts, with a sanctioned amount of more than ₹12.3 lakh crore.
What is a Mudra Loan?
A Mudra loan is a type of financial assistance provided by the PMMY. MUDRA is an acronym for Micro-Units Development and Refinance Agency, a financial institution set up by the Government to develop and refinance micro units and enterprises.
Borrowers can apply for business loans spanning from ₹50,000 to ₹10 lakh under the Sishu, Kishor, and Tarun schemes of the Mudra programme.
Businesses can obtain Mudra loans under the PMMY scheme via a nearby bank branch or other financial institution. You can also apply for Mudra loans online using the Udyami Mitra portal.
What are the Expenses Covered Under Mudra Loans?
The Mudra loans cover several expenses you can finance using the money borrowed. Below are some examples:
- Vehicles for Transportation: Purchase of goods and passenger vehicles, such as auto-rickshaws, small goods transport vehicles, e-rickshaws, and taxis.
- Community, Social And Personal Services: These include hair salons, beauty salons, gyms, boutiques, tailor shops, dry cleaning, cycling and motorcycle repair shops, photocopying facilities, medicine shops and courier agents.
- Food Product Sector Activities: Activities that include papad making, achaar making, jam or jelly making, agricultural produce preservation at the rural level, sweet shops, small service food stalls and day-to-day catering or canteen services, cold chain vehicles, cold storages, ice making units, ice cream making units, and biscuit, bread and bun making.
- Business Financing for Traders and Shopkeepers: Individuals can receive financial aid for running their stores, businesses, services, and non-farm income-producing ventures with a recipient loan of up to ₹10 lakh per firm and borrower.
- Agriculture-Related Activities: Agriculture-related activities include pisciculture, beekeeping, poultry, livestock-rearing, grading, sorting, aggregation agro industries, dairy, fishing, agri-clinics and agribusiness centres, food and agro-processing, and so on.
Documents Required to Obtain a Mudra Loan
When you apply for a Mudra loan, you will have to submit specific documentation for meeting KYC and other creditworthiness formalities:
- Application form filled out based on the loan category
- An identity proof, such as an Aadhaar card, voter ID card, driving licence, passport or PAN card
- Address proof, such as utility bills (electricity bill or telephone bill), Aadhaar card, voter ID card or passport
- Few passport-size photographs of the applicant
- A caste certificate (if applicable)
How To Apply for a Mudra Loan?
Step 1: Make sure the essential documents are in hand. The vital records you will need are evidence of identification, proof of address, proof of business and other parameters as mentioned above.
Step 2: Go to a lender who is part of the Mudra scheme, online or offline, whichever seems more convenient, and complete your application form.
Step 3: The final step would be to submit the required paperwork and your application form.
How Can You Check Your Mudra Loan Status?
After applying for a Mudra loan with a bank or a non-banking financial company (NBFC), you can keep track of the same using the bank’s official website by logging in with your credentials. You can also visit the bank and know the status through a representative.
However, it is essential to understand that Mudra is a refinancing facility. It does not make direct loans to microenterprises or individuals.
The PMMY scheme was initiated to make finance easily accessible to everyone and to encourage the spirit of entrepreneurship in India. These loans provide for the needs of non-corporate and pioneering businesses since banks and other traditional financial institutions used to ignore them, which favoured large corporations or urban start-ups.
The Mudra scheme aims to make credit readily available to the lower sections of society. They were previously exploited and forced to borrow money at exorbitant interest rates. In the case of Mudra loans, the applicant could pick a bank or financial institution of their choice and keep track of the loan status online or offline.
Frequently Asked Questions (FAQs)
Are Regional Rural Banks (RRBs) eligible for refinancing Mudra loans?
Yes, Mudra will be extending refinance support to RRBs.
Who is eligible for a Mudra loan?
Mudra loans are available to any Indian citizen with a business plan for income generation. The loan request should be for establishing a new or improved micro business enterprise in the production, processing, trading or service sectors.
Can I take a Mudra loan to open a franchisee model of ice cream parlours?
Yes, Mudra has special schemes for traders and shopkeepers.
Can I file for a grievance faced during the Mudra application process?
Any grievance that you want to file against the bank officials in approving the loan or any complaints against non-consideration of the Mudra loan can be registered with the higher authorities in the particular bank, such as the regional manager or zonal manager of the bank.
Is there any collateral taken against a Mudra loan?
The commitment of any security is not necessary for Mudra loans.
What are the interest rates applicable on Mudra loans?
The interest rates have been deregulated, meaning banks set their interest rates per the RBI’s guidelines. Visit a bank’s local branch or official website to know the applicable interest rates.