Everyone is talking about Mudra Bank and its loan schemes nowadays. It is a good start-up by the PM Modi to develop India economically. You all may be having many queries related to the Mudra Loan scheme like what exactly the process is, who is eligible, what may be the benefits, how to apply, etc. Your search ends up here as we are providing you all the answers in a brief, sequential and comprehensible way.
Let us start with what exactly this is all about!
About Mudra Bank –
MUDRA (Micro Units Development and Refinance Agency) Ltd. is a financial body set up by the Government of India under the leadership of PM Narendra Modi for the development and refinancing activities to provide offerings to micro finance institutions i.e. small business sectors.
The institution, with corpus of Rs. 20,000 crores, will offer up to Rs. 10 lakhs to small business units and thus supporting them financially.
Responsibilities of MUDRA bank –
- Registration of MFI (Micro Finance Institutes) entities.
- Regulation of MFI entities.
- Rating of MFI entities.
- Promoting refinance to all last mile financiers like NBFC, small business units, societies, trusts, small banks, RRBs, scheduled commercial banks, etc.
- To develop and expand the delivery channel at the ground level.
- Maintain policy guidelines for the micro and small enterprises business units.
- Introduce innovative method to prevent indebtedness.
- Formulating steps for recovery methods.
- Implementing an architecture of Last Mile Credit Delivery to micro businesses.
- Introducing Credit Guarantee Scheme to guarantee the payment of loans to the entrepreneurs or business holders.
Eligibility Criteria for Mudra Loan Scheme:
Here are the conditions for the participating banks and financial companies, which can lend for this scheme:
All Scheduled commercial banks (both public and private sector banks) with 3 years of continuous profit record of accomplishment, net NPA up to 3% (not exceeding this given limit), minimum net worth of Rs. 100 crores, and at least 9% CRAR are eligible for the Loan Scheme.
The other lending institutions are –
- 1. Regional Rural Banks
- Scheduled Urban Co-operative Banks
- State Co-operative Banks
- Micro Financial Institutions like NBFCs, Trusts and Societies.
List of some banks offering Mudra Loans –
- United Bank of India
- Union Bank
- Vijaya Bank
- Allahabad Bank
- UCO Bank
- Syndicate Bank
- Punjab and Sind Bank
- Oriental Bank Of Commerce
- Indian Overseas bank
- Indian Bank
- ICICI Bank
- IDBI Bank
- Dena Bank
- Central Bank of India
- Canara Bank
- Corporation Bank
- Bank of Maharashtra
- Bank of India
- Bank of Baroda
- Axis Bank
- Andhra Bank
- Punjab National Bank
- HDFC Bank
- State Bank of India
These all banks will be responsible for the development of standardized set of covenants governing last mile lending to micro and small enterprises.
Mudra Loan Types/ Category
Based on the growth and funding needs of the micro business units, Mudra Loan Scheme has divided the category of loan in three different parts:
Shishu Scheme: As the name suggests the meaning (i.e. Child), it serves so. All the start-up businesses and one who have new business will come under this category of loan scheme.
Under this category, the loan up to Rs. 50,000 will be sanctioned. In addition, there will be no loan-processing fee. The rate of interest is 1% per month and the maximum repayable period is up to 5 years.
Kishor Scheme: The loan amount covered will be above Rs. 50,000 and up to Rs. 5lakh. This scheme covers the one who has started the business but is to be established.
Tarun Scheme: Under this scheme, the amount of loan sanctioned will be above Rs. 5 lakhs and up to Rs. 10 lakhs. This scheme is for all those micro business units who have an established business and want to invest more for the betterment.
Some of the people who can apply for the loans are Graduated people who want to start up with a small business, artisans, potters, shopkeepers, food processors, production business, manufacturing unit, trading and services.
How to apply for Loan under Mudra Loan Scheme
Here are some easy steps that may help you as guidance for applying Mudra Loan:
First of all, here is a list of documents that will be required before applying for the loan:
- Identity proof (PAN card/ Voter ID/ Driving License/ Aadhaar Card, etc.) self-attested.
- Residential proof (Voter ID/ Passport/ Phone bill/ Electricity bill/ Bank statement. etc.).
- Two passport size photographs.
- Category proof (OBC/ SC/ ST, etc.)
- Name of machinery/ price of machinery/ details of machinery/ or items to be purchased.
- Quotation of machinery/ item to be purchased.
- Ownership Identity/ Address of business unit/ Registration Certificates.
For any assistance, you can visit your nearest branch (private or commercial) and present your business ideas. You can download the loan application form, fill and submit it along with the above-mentioned documents attached to it. All the other formalities will be as per the bank’s instructions.
After following these steps, the Loan will be sanctioned to the one who will apply for.
Interest Rate offered by Mudra Loan
Mudra is lending to micro finance institution at a current rate of 7%. The other banks offering rates are as follows:
ICICI Bank (6%) percentage
Corporation Bank (11-11.9) percentage
HDFC Bank 11% – 13%
PNB 11%- 12.5%
IDBI – 11%
Benefits of the Mudra Loan Scheme
If you are going to set any small business or want to make your existing business more productive, then this scheme is a beneficial one for you.
Mudra loan scheme will bring an innovative financial mean that will reduce the cost of funding for the borrower. In addition, if the loan proposal is linked to some government scheme of providing subsidy, it will be also included in this scheme.
In addition to this, there are some features of Mudra you might be eager to know
– Introduction of MUDRA card( a RuPay Debit card) which will provide a facility of credit to withdraw cash from ATM , using POS purchase, repaying the amount(if sufficient available) so that interest burden is reduced.
-MUDRA offers a special scheme for woman entrepreneur called Mahila Uddyami Scheme under all the three categories i.e. Shishu, Kishore and Tarun.
-It would provide a low cost and accessible funding to micro finance institutions to further leverage the budding entrepreneurs. Preference would be given to weaker sections of society.
-The Mudra Bank will in all ways increase the access of funds and liquidity required for small-scale industries.
-The Mudra Bank would combine capital with integrity and thus make it a one-stop solution for success of young business community.
-It would ensure that uniformity and best practices are adhered in micro finance institutions.
Mudra Yojana is one of the best schemes for economic and financial development of India. This scheme is beneficial for all the participating banks and financial institutions as well as applying businesspersons. The Government is taking a step toward making India progress.
This move will ‘Fund the Unfund’ for sure.