(mudra.org.in) Pradhan Mantri MUDRA Loan Yojana, PMMY (Apply, Eligibility, Interest Rates, Helpline Numbers, SBI)
With the launch of much awaited Pradhan Mantri Modi MUDRA Loan Scheme , the small and independent entrepreneurs in India can now enjoy a sigh of relief as doors to myriads of financial services open up for them. For eons, these small entrepreneurs have been struggling to get access to banking system, loans, insurance and other financial products that are often considered the backbone of any business.
Formally launched in April 2015, the MUDRA Bank Yojana has opened its doors for these small businesses. With a financial strength of ₹ 20,000 crores, the MUDRA Bank aims to serve a behemoth pool of 5.77 crore small business that are currently engaged in a wide spectrum of economic activities like retail, manufacturing, trading etc.
How to Apply Mudra Loan
- Firstly, the applicant for MUDRA loan should approach any of those banks that are listed by the scheme as loan providers.
- Then, provide the bank with the complete business details of your business, using which the bank would categorise your business into one of three categories specified by the scheme.
- Shishu Loan – Maximum loan amount is Rs.50,000
- Kishor Loan – Maximum loan amount is Rs.5 lakh
- Tarun Loan – Maximum loan amount is Rs.10 lakh
- Then, filling up the MUDRA form for loan, along with current account opening in the bank would suffice the loan application.
- The loan under this scheme is a collateral free loan, and hence it is easy to obtain with a good credit history of the business.
Eligibility to Attain MUDRA Loan
To avail the benefits of getting loans from newly started MUDRA banks, one should be well aware of the below listed eligibility criteria apart from normal LOAN availing procedures. One who fails to match those criteria wouldn’t be allowed to avail MUDRA LOAN.
- Loan applicant must be an Indian Citizen, unlike other banks MUDRA Bank offers loan only for INDIAN citizens.
- Loan can be availed only for micro or small scales businesses from rural areas.
- Proper Proof for IDENTITY, RESIDENCE along with two set of Proprietor/ Partners/ Directors photos.
- Loan amount should be quoted under the maximum limit Rs. 10,00,000
Interest Rates of MUDRA Loan
Recently, launched MUDRA bank by our Prime Minister offers various forms of interest rates according to their loan lending schemes. Below listed points will elaborates the interest rates details according to the MUDRA Scheme. Interest Rate of Mudra laon varies from 11% to 18% from banks to banks.
- If loan availed under MUDRA SHISHU up to Rs.50, 000 then nominal rates around 10% -12% interests are charged.
- If loan availed under MUDRA KISHOR up to Rs. 5, 00, 000 which comes under unsecured loans so interest rates would be in between 14% – 17%.
- If loan availed under MUDRA TARUN with the margin of 5L to 10L, interest will be at high end starts from 16% and varies from bank to bank.
Mudra Loan helpline Numbers
To assist the credit holders who have already applied for the Mudra loan scheme or for budding applicants, the govt. has also started dedicated help lines. The govt. has provided two national toll free help line numbers – 1800 180 1111 and 1800 11 0001 which can be called 24*7 or any queries related to PMMY.
Benefits of Attaining MUDRA Loan
As we all know our Prime Minister Narendra Modi launched MUDRA Bank recently, the main accusative on starting MUDRA is to offer suitable scheme for individuals from rural to grow their businesses with low interest finance.
Few highlighting Benefits of MUDRA loans are listed below
- Using MUDRA loans one can able be attain finance ranges from Rs.50, 000 to Rs.10, 00,000.
- Without any processing fee, one can avail loan without any bother.
- MUDRA loans mainly focus on small and micro level businesses instead of concentrating on large scale businesses.
- Interest rates of MUDRA loans are pretty affordable and low when compared with other normal banker’s interest rates.
Documents Required to attain MUDRA Loan
The list of documents required for MUDRA Bank Loan is as follows:
- Identity proof, residence proof, and Business address or establishment proof.
- Balance sheets, Income Tax/ Sales tax returns (if applicable) of last three years
- A Written proposal or the Partnership Deed of partners etc. of the Company is needed.
- Latest Assets and liabilities statement along with the income tax return of promoters and guarantors.
- A rental agreement, if the business premises are on rent.
- Registration forms of SSI/MSME, if applicable.
- Projected balance sheet for the coming two years if having working capital limits and projected balance sheet for the period of term loan if having loan, for cases involving Rs. 2 lakh and above.
Mudra Loan in SBI
To help the small sector industries and micro units, the SBI which is the largest banking network of India is committed to help the eligible beneficiaries to get their deserved loans to grow their business. The eligible beneficiaries can approach any nearest branch of SBI and collect the PM Mudra Yojana form.
Whenever, one takes Mudra loan from SBI, the repayment period of the loan is 5 years which includes a moratorium period of 6 months. State Bank charges a low processing fee of 0.5 per cent on loans amounting from Rs. 50,000 and up to Rs. 10 lakh. Whereas, those applicants who will apply for Mudra loan in SBI for amount up to Rs. 50,000 will not be charged with any processing fee at all.
Mudra Loan for Women
Mudra Loan scheme launched by PM Modi aims to provide capital to the unfunded to empower them so that they can start their own business. This also includes special benefit to the women. The govt. has dedicated a special budget allocation just for the Mudra credit of women applicants.
Women can start their own business as an individual by applying for Mudra loan or they can set for joint ventures and apply for the same. More and more female beneficiaries are getting full benefit of this loan and have been flourishing in sectors like tailoring units, handicrafts, saloon, etc.
As per recent study, loans worth 1.8 lakh crore has been disbursed so far and 70 per cent of the Mudra credit holders in the country are women, will grow in coming years.
Mudra Loan for SC, ST and OBC
The main aim of implementing the Mudra credit scheme in the country was to provide those citizen with easy loans who could not approach banks and other financial institutes for loans, to be utilized for creating or growing own business. Hence, the SC, ST, and OBC categories are one of the major target beneficiaries of this scheme. To get benefits o the scheme, applicants of this categories should submit their relevant document (SC / ST / OBC certificate) along with the Mudra application.
Govt. reports show that 20 per cent of the total beneficiaries belong to SC category, 5 per cent are from the ST category and whopping 35 per cent Mudra loan holders are from OBC category in the country.
Disadvantages of MUDRA Bank
Though, MUDRA loans are tents to be offering finance benefits for individuals in rural areas for their growth it has some flaws to overcome.
- The problem mainly focus on our economy, since our country growth still mainly depends upon the bigger scale companies concentrating on funding micro or small firm will be a difficult process also several commercial banks are hesitating to lend finance support to small scale businesses especially from rural areas.
- Financing agencies like NABARD, SIDBI which are similar to MUDRA bank are not functioning good which cause biggest worries to newly started MUDRA LOANS.
- MUDRA bank promotes shadow banking often refers to the bank functioning within certain boundaries which is not good.
Challenges faced by Mudra Loan
Though, MUDRA bank was initially started to offer support for small scale industries. Government has the plan of formalize the structure of MUDRA broadly.
- Since, MUDRA loans offers finance supports for the individuals or business starts mainly from rural areas it will be difficult to have hard loan recovery options. Below listed are the few challenges MUDRA loan will face.
- Financing small scale enterprises will be squeezed if large business sectors keep delaying their re-payment.
- It creates doubt whether MUDRA can achieve its annual target, as it just crosses 30% of its annual target on its initial 6 months time period.
Referring to 2013 NSSO survey, PM Narendra Modi stated that these 5.77 crore small business which are mostly proprietorship businesses employ 12 crore Indians as opposed to large industries that absorb a meager 1 crore and 25 lakh pairs of working hands from Indian skilled labor force. While that is a perplexing fact, Mr. Modi added to the surprise stating that these small scale businesses absorb ₹ 11 lakh crores in funds for staying operational and in the process, individual units operate with a small debt of ₹ 17,000 only.
The idea of Modi MUDRA Bank Yojana, according to PM Modi, was born out of the statistical data provided by survey reports. MUDRA, which stands for Micro Units Development and Refinance Agency, aims towards providing the much needed financial support to these small scale entrepreneurs, who according to PM, are key to continued growth and prosperity of Indian economy. According to PM, integrity is the greatest asset of a poor man and when this integrity is fused with MUDRA, Indian economy will experience never-before-experienced growth. He cited example of women self-helpgroups in rural sectors and stated that these micro-business groups show unparalleled integrity and honesty not seen in other business sectors in the country.
What Does Modi MUDRA Bank Yojana Aim For?
MUDRA operateswith the following principal objectives which are:
- Stabilizing Indian’s microfinance sector via inclusive participation and regulation. This will involve regulation of borrowers and lenders of microfinance.
- Aiding agencies and Microfinance Institutions (commonly abbreviated as MFIs) by extending credit support. This will allow these MFIs and agencies to lend money to individuals, SHGs (self-help groups), retailers and other small business.
- Maintaining a registered record of MFIs and agencies for the first time ever in history and introducing an accreditation and performance rating system. With the new rating system, last-mile borrowers will be able to evaluate the agencies or MFIs they approach for loans. Agencies and MFIs with best track records will get edge over others. This method will thus ensure that the lenders stay competitive and operate with best industry practices to stay in business. End result is simple – borrowers emerge triumphant!
- Offering structured guidelines to borrowers to prevent business failure. These guidelines will allow business owners to take necessary corrective steps in time in order to avoid catastrophic losses that can eventually lead to defaults. On the other hand, MUDRA will also provide a set of guidelines that lenders need to follow for debt recovery in case of defaults.
- Introduction and implementation of technological support that will help to streamline and simplify lending and borrowing of capital. These technologies will also help to monitor the proper usage of the capital that is distributed through MUDRA.
- Development of standard protocols that will, over time, become the last-mile business’ backbone.
- Developing a robust framework so that an efficient delivery system for last-mile credit to micro and small businesses can be developed.
Will Pradhan Mantri MUDRA Bank Yojana Be Effective?
The two big questions that the Pradhan Mantri MUDRA Bank Yojana faces are:
- Will the scheme be effective?
- What kind of impact will it have on Indian economy?
Effectiveness of the scheme
Effectiveness of the MUDRA Bank Yojana can be gauged only after a certain period of time. It is really difficult to say whether or not this scheme will succeed in the long run. Considering the demography of India and the sheer number of underprivileged people living in the country, the Yojana can make a good impact if properly executed.
As the scheme targets the section of the country that has long been cut off from mainstream financial services, the possibility of engaging the target population is very high but there are some challenges. Reaching out to underprivileged people, especially in villages is one big hurdle.
Their honesty and integrity of these people cannot be questioned but their lack of education and reluctance to open up for new endeavors is a major concern. The government will need to work at grass-root level, working directly with people and educating them about the benefits of the scheme. Conventional advertisements like banners and hoardings will not work. Something that captures the imagination of these village masses has to be implemented. It is not about offering them a fish to eat. It is rather teaching people how to fish so that they never stay hungry.
Which sectors will be covered by MUDRA Bank Yojana (mudra.org.in)?
To begin with, the Pradhan Mantri MUDRA Bank Yojana will target a few selected sectors that include:
|4||Social, Personal and Community Services.|
Later, depending on the success of the scheme, more sectors will be included but that is not going to happen anytime soon. At least a few years will be required to expand the scope of the scheme.
What products are currently offered by MUDRA Bank Yojana (mudra.org.in)?
Currently MUDRA Bank Yojana offers three distinct products which are:
|Sno||Loan Category||Loan Amount and Description|
|1||Shishu||This is targeted towards startups and sanctioned loan amount will be up to ₹ 50,000. The idea is to provide enough financial support to cover the expenses for business set up|
|2||Kishore||This is targeted towards already existing businesses that lack exposure. The sanctioned loan amount will be between ₹ 50,000 and ₹ 500,000. This scheme will help businesses to gain exposure by expanding their supply segment, which will in turn help to reach out to more customers|
|3||Tarun||This is for those businesses which have grown to a certain level and have enough exposure but need help to take the business to a new level. The sanctioned loan amount will be between ₹ 500,000 and ₹ 1,000,000.|
Mudra Loan Vs Personal Loans
|S.No||Mudra Loan||Personal Loan|
|1||A special loan which can be available by only businessmen or for business purpose||It’s a universal type of loan, which can be availed to satisfy a person’s financial needs.|
|2||Mudra Loans are under governance by Government of India. Maximum Amount is Rs.10 Lakhs||It can be availed by both public banks and also from private banks. Meanwhile, there’s no maximum limit for loan amount. It will decided by bank administration.|
|3||Mudra Loans are offered with the Interest rates from 10% -16%, interest gets varies depending upon the banks, loan category and loan amount.||Where else, in personal loan interest are charged from 11% to 22% depending upon the bank’s policy.|
|4||Loan amount will be credited in form of mudra cards, which will be given specially for applicants from banks.||Loan amount will be credited to personal account.|
How to Attain MUDRA LOAN Forms?
MUDRA LOAN – Innovative way of solving financing needs of micro or small scale enterprises from rural areas. As individuals are often excluded from availing the benefit of financial support from other formal banks, MUDRA bank is concentrates mainly on the peoples from rural areas for their growth.
- Though MUDRA Bank is not a fully functioning bank currently, in near future it will be one among the full fledged banks in INDIA.
- To avail MUDRA LOAN form one can visit any of the lending finance institutions or banks in their region
- Having all required documents will lead you to offer loan from any of your nearest banks. For more details visit: www.mudra.org.in
Impact on Indian economy
Assuming that PM MUDRA Bank Yojana is implemented as envisioned, there will be series of positive impacts on Indian economy which are listed below:
- Increased entrepreneurial success will immediately boost the GDP (Gross Domestic Product) of demographic region where the businesses are located.
- Increased business success will mean increased employment and increased income, which in turn translates into increased spending.
- More spending power in hands of general populace means increased demand for goods and services.
- Increased demand in return stimulates the manufacturing segment of the economy and supply of goods and services increases to meet the increased demand.
This creates a cycle where in business units and end users all benefit in form of increased income and better lifestyle. Increased income in turn allows access to better health care facilities, better education, better nutrition and more. As these aspects of life improve, work efficiency improves. How? Proper medical care for instance will not only improve life expectancy of an individual but will also help him/her to stay healthy and active. An active person performs better in challenging work conditions than a person with poor health. Proper education on the other hand provides the necessary knowledge and skills that can be put to use for finding better job opportunities.
Again, a business unit is not a standalone unit. It cannot survive on its own! For instance, if MUDRA Bank Yojana helps self-help groups with finances, they can operate on larger scales. Large scale operations in turn require more raw material input. This increased demand in raw material will increase the activities in raw materials production sectors [in case of self-help groups raw materials may include anything like cotton, jute, mud (usually needed for pottery), dye, etc.] and hence increase employment in those sectors to meet the increased demand. Again, increased supply of raw materials will require increase support from transport industry, transport industry in turn will need more support from fuel industry.
Thus, the positive effects start propagating in every direction, creating a snowball effect of sustained growth over time. Growth of indigenous businesses also improve GNP or Gross National Product by a collective growth in GDP.
There is even more! For instance, increase in spendable income will mean increased revenue for government in form of taxation. With increase in government revenue, reliance on foreign loans (like loans from International Monetary Fund (IMF) or World Bank) will decrease significantly. National debt will fall and government spending for infrastructural development will increase. Improve infrastructure simply means, improved health care systems, improved education, improved transportation etc.
So, if Pradhan Mantri MUDRA Bank Yojana succeeds, the whole economy will grow over years and help India emerge as one of the most powerful economies in world.