Under the aegis of Pradhan Mantri MUDRA Yojana scheme, the central government in India has launched MUDRA loan with the objective to help small business owners to meet the capital expenses and operate the business costs effectively. This is basically a financial initiative by the central government to facilitate the micro units and small businesses and offer them with required funds to develop their business. Small and medium sized businesses are always incapable of availing loans from banks because of inadequate funds to pay off the interest and lack of security. There are over 577 Cr. of small businesses functioning in the Indian market and supporting those businesses financially would lead to economic advancement and this is why this loan scheme was launched by the government.
Key Objectives of Pradhan Mantri MUDRA Yojana!
The loan scheme was introduced by keeping in mind the different objectives which need to be fulfilled during the scheme. The prominent objectives of launching the scheme include:
- To lay down the policy guidelines of financing the micro units and small enterprises.
- To register all the micro finance institutions and related enterprises and then regulating them.
- To help the small enterprises and businesses to grow and develop for betterment of economy.
- Helping the lower income groups in expanding and developing their respective small businesses.
- Helping to create easy access to the finances for the unbanked and supporting them to minimize the cost of finances.
- Offers lending preferences to the SC and ST group of people.
- Regulating the micro finance institutions which are dealing in manufacturing, trading and services.
Different Types of Pradhan Mantri MUDRA Yojana Loan and Interest Rates
There are different types of financing available under this scheme and the interest rates and loan amount varies for accommodating the growth phase of small businesses. Below are the applicable limits and the interest rates under Pradhan Mantri MUDRA Yojana Loan scheme.
- Shishu – Under this scheme the highest loan limit is Rs. 50,000 and the interest rate is 1% per month or 12% per year and the repayment period can last up to 5 years.
- Kishore – Under this scheme the highest loan limit is between Rs. 50,000 and Rs. 5, 00,000 and the interest rate for the loan amount varies depending upon the bank. According to the guidelines of the loan scheme, the banks are required to check the credit history of the borrowers prior to giving them the loan. The repayment period of the loan also depends on the bank from where you are borrowing it.
- Tarun – This is the last scheme under which small business can opt for a loan between Rs. 5, 00, 000 and Rs. 10, 00, 000. The interest rate is decided based on the bank and the credit history of the applicant is checked prior to disbursing the loan. The repayment period of the loan is based on the option offered by the bank.
There are over 27 Public Sector Banks, 17 Private Sector Banks, 34 Regional Rural Banks and 36 Microfinance Institutions and more which are offering such loan schemes to small business.
Eligibility Criteria for Pradhan Mantri MUDRA Yojana
As mentioned, the loan is only offered to non-farm income generating businesses dealing in manufacturing, trading and services and they must have the credit requirements less than Rs. 10 Lac. In general, small and medium sized businesses who want to avail loans less than Rs. 10 Lac for micro units are actually qualified for such MUDRA loans schemes. You may download the Pradhan Mantri MUDRA Yojana PDF file from the official site to learn more about the scheme and check the legibility criteria.
The application for the loan must accompany the following documents without which the loan application would be rejected by the financial institution. This includes:
- Identity.
- Quotes of the equipments that are to be purchased with loan amount.
- Address proof and identity proof og the business.
- Category proof if available.
- Supplier details, price of machinery and details of equipments.
Apart from these documents, the bank may also ask for other documents from the applicants and applicants may also need to pay additional charges like processing fees and others. Applicants are required to clear with bank about the repayment period which can extend up to 5 years. For more details regarding Pradhan Mantri MUDRA Yojana you may visit the site of Justbutmust.com.
