MUDRA: an initiative of government to provide financial assistance to SMEs

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MUDRA: an initiative of government to provide financial assistance to SMEs

Micro-units Development and Refinance Agency or MUDRA is a financial initiative; it was established by the Government of India in April 2015.  It aims to provide integrated financial assistance to the micro-units like small manufacturing units, food service units, and small industries and grant them adequate funds.  Under MUDRA scheme, efforts are made to extend the facility of institutional finance to small business entities associated with different trading, manufacturing, and service activities.

 MUDRA empowers small borrowers to borrow from all Public Sector Banks like PSU Banks, Regional Rural Banks, and Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions (MFI) and Non-Banking Finance Companies.

Different Categories

The scheme provides loans into three different categories:

Shishu – under Shishu, you can avail loan up to Rs. 50,000

Kishore- under Kishore, you can avail loan from Rs. 50,001 to Rs 5 lakhs

Tarun-   under Kishore, you can avail loan from 5 lakhs and to Rs 10 lakhs

Eligibility Criteria

This scheme is for all Indian people who want to start their startup. If you have a business plan for a non-farm sector like manufacturing, processing, trading, or service sector, you can apply for this scheme. But this scheme is for business having credit less than Rs 10 lakh.

Sectors under MUDRA

This scheme was launched to maximize coverage of beneficiaries and tailor products to meet the needs of specific business activities. Presently, it is offered for the business in several sectors including:

  • Land Transport Sector
  • Community, Social & Personal Service Activities
  • Food Products Sector
  • Textile Products Sector

The Objective of the MUDRA Scheme

Mudra loan is initiated for numerous purposes that provide income generation and employment creation. Here are some major objectives of this scheme:   

  • It lets entrepreneurs get financial support for their startup. This business loan support Traders, Shopkeepers, Vendors, and other Service Sector activities.                                            
  • It is provided to small businesses that deal in specific activities in the manufacturing, services or trading sectors.
  • SMEs can use the fund obtained from a MUDRA loan for marketing, to extend their working capital and also for acquiring capital assets to grow their business.

How to apply

Borrowers, who want to avail this scheme under Pradhan Mantri MUDRA Yojana (PMMY), they need to submit the below documents:

Importance Documents to submit:

  • Identity Proof
  • Residence Proof
  • Photograph of Applicant (2 copies)
  • Quotation of Machinery  and other items
  • Name of Supplier and Machinery Details
  • Identity Proof  and Business Address
  • Proof of SC / ST / OBC / Minority (if any)

Note: Applicant should not be a defaulter in any Bank


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