Pradhan Mantri Mudra Yojana (PMMY) - Micro Units Development and Refinance Agency scheme for micro-enterprises.

Introduction

The Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme launched by the Government of India to provide financial support to micro-enterprises across the country. This initiative aims to promote entrepreneurship, create employment opportunities, and foster inclusive growth by ensuring access to institutional finance for small business units.

What is Pradhan Mantri MUDRA Yojana?

The Pradhan Mantri MUDRA Yojana (PMMY) is a program introduced by the Honorable Prime Minister on April 8, 2015, with the aim of offering loans of up to 10 lakh to small and micro enterprises that are not part of the corporate or agricultural sectors. These loans fall under the category of MUDRA loans within the framework of PMMY. These financial facilities are extended by various institutions such as Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks, Micro Finance Institutions (MFIs), and Non-Banking Financial Companies (NBFCs). Borrowers can approach any of the above lending institutions or submit their applications online through Uday Mitra.

Latest Update of Pradhan Mantri MUDRA Yojana

Under the Atmanirbhar Abhiyan, the Central Government has recently announced benefits for borrowers in the Mudra Shishu category. These benefits include a relief package of up to Rs. 1,500 crore and an interest subsidy of Rs. 1,500 crore. Additionally, early recipients will receive a 2% discount on their interest rate for one year.

Pradhan Mantri MUDRA Yojana Mission, Vision, & Purpose

Mission

The mission of the Pradhan Mantri Mudra Yojana (PMMY) is to provide financial support and stability to micro and small enterprises across India. By facilitating easy access to institutional finance, PMMY aims to empower small business owners, promote entrepreneurship, and contribute to the country's economic development. The scheme strives to create an inclusive financial system that caters to the needs of underserved and unbanked segments of the population.

Vision

The vision of PMMY is to foster a robust and vibrant micro-enterprise sector in India, driving economic growth and generating employment opportunities. By ensuring that every micro and small business has access to adequate financial resources, PMMY envisions a self-reliant and prosperous India where small enterprises play a pivotal role in the nation's development. The scheme aims to bridge the credit gap for micro-entrepreneurs and create a supportive ecosystem for their sustainable growth.

Purpose

The primary purpose of the Pradhan Mantri Mudra Yojana (PMMY) is to:

Enhance Financial Inclusion: Provide micro and small enterprises with easy access to credit, thereby integrating them into the formal financial system.
Support Small Businesses: Offer financial assistance to non-corporate, non-farm small and micro enterprises to help them start, sustain, and expand their operations.
Promote Entrepreneurship: Encourage the spirit of entrepreneurship among individuals from various socio-economic backgrounds, including women, youth, and marginalized communities.
Generate Employment: Create employment opportunities by supporting the growth and development of micro and small enterprises across different sectors.
Facilitate Economic Growth: Contribute to the overall economic growth of the country by nurturing and strengthening the micro-enterprise sector.

Eligibility Criteria for PM MUDRA Yojana -

To qualify for the PMMY Scheme benefits, applicants must be Indian citizens.

This scheme provides loans tailored for individuals engaged in income-generating activities in the non-farming sector such as:

Service Sector
Manufacturing
Processing
Trade
Other fields with a credit demand of less than ₹10 lakhs.

Indian citizens seeking MUDRA Loans through the PMMY Scheme can apply through Microfinance Institutions (MFIs), Banks, or Non-Banking Financial Companies (NBFCs).

Objectives of Pradhan Mantri MUDRA Yojana -

The Micro Units Development and Refinance Agency (MUDRA) oversees the MUDRA Loan scheme. It provides loans up to INR 50 lakhs to small-scale industries for their business operations. It collaborates with state-level and regional coordinators to offer finance to small and micro business enterprises, acting as a Last-Mile financier.

The objectives of MUDRA Bank include:

Funding the unfunded by sanctioning loans up to INR 10 lakhs for non-farm activities like processing, trading, manufacturing, etc. It supports firms in need of immediate capital.
Increasing employment opportunities by providing credit facilities to micro and small enterprises, contributing to overall GDP growth.
Regulating and monitoring Microfinance Institutions (MFIs) by overseeing new registrations.
Promoting financial stability by utilizing technological solutions to ensure last-mile credit access for small and micro businesses.
Integrating the informal and formal sectors enhances financial stability for small-scale industries and expands the tax base.

Types of PMMY Loans -

The Pradhan Mantri Mudra Yojana (PMMY) offers three types of loans to cater to the diverse financial needs of micro and small enterprises at different stages of growth. These loans are classified into three categories: Shishu, Kishor, and Tarun.

1. Shishu Mudra Loan

Loan Amount: Up to ₹50,000.
Purpose: Intended for new or early-stage businesses that require minimal funding to start their operations.
Eligibility: Startups and micro-enterprises in their initial phase of business setup and development.

2. Kishor Mudra Loan

Loan Amount: ₹50,001 to ₹5,00,000.
Purpose: Designed for growing businesses that need additional funds to expand their operations and increase their working capital.
Eligibility: Established businesses that are looking to scale up their operations or require financial assistance for business enhancement.

3. Tarun Mudra Loan

Loan Amount: ₹5,00,001 to ₹10,00,000.
Purpose: Aimed at well-established enterprises seeking substantial funding for further expansion, modernization, or diversification.
Eligibility: Businesses that have a proven track record and require larger amounts of capital to grow to the next level.

These three categories of PMMY loans ensure that micro and small enterprises receive the appropriate level of financial support based on their specific needs and stage of development. By providing tailored financial solutions, PMMY aims to foster the growth and sustainability of small businesses across India.

Top 10 Banks Offering MUDRA Loans -

In the following section, let us look at the top 10 banks in India currently offering business loans under the PMMY, with interest rates ranging from 11% to 37%. The banks offering MUDRA loans are:

Oriental Bank of Commerce
Kotak Mahindra Bank
ICICI Bank
Standard Chartered Bank
Indian Bank
Central Bank of India
State Bank of Patiala
Bank of India
IDBI Bank
Citibank

Sectors Covered under PMMY - The Pradhan Mantri Mudra Yojana (PMMY) covers a wide range of sectors across the non-farming economy, aiming to support micro and small enterprises engaged in various income-generating activities. The sectors covered under PMMY include:

Land Transport Sector - Loans to support the purchase of transport vehicles. These vehicles could be used for goods or personal transport.

Types of Activities under that Sector

Auto-rickshaws, E- rickshaws, etc.
Passenger cars and taxis.
Small-goods transport vehicles.
Other three-wheelers.

Service Sector - This includes community services, social services, or personal services.

Types of Activities under that Sector -

Hair and beauty salons, beauty parlours, etc.
Tailoring stores, boutiques, dry cleaning services, etc.
Gymnasium, Athletic training, medical shops, etc.
Garage, Cycle & motorcycle repair centres, etc.
Other services like photocopying shops, courier agencies, etc.

Food Product Sector - Support for small scale food industries.

Types of Activities under that Sector

Manufacturing papads, pickles, jams/jellies, and other agricultural produce/preservation methods.
Sweet shops, small service food centres, etc.
Everyday catering services, canteens, etc.
Micro cold storages, ice-making factories, Cold chain vehicles, ice cream making industries, etc.
Bakeries and Baked products manufacturing.

Textile Sector - Supporting micro textile industries that produce garment and non-garment products.

Types of Activities under that Sector -

Handloom and power loom industry
Handwork industry like embroidery, chikan work, dyeing and printing, knitting, etc.
Mechanical or computerized stitching for garments and non-garments.
Production of automobile and furnishing accessories, etc.

Conclusion -

The Pradhan Mantri Mudra Yojana (PMMY) stands as a cornerstone initiative by the Government of India, launched to bolster micro-enterprises across the nation. Since its inception, PMMY has been instrumental in promoting entrepreneurship, fostering economic growth, and creating employment opportunities through easy access to financial support. By catering specifically to non-corporate, non-agricultural sectors with loans up to ₹10 lakh under three distinct categories—Shishu, Kishor, and Tarun—PMMY has empowered countless small business owners to realize their dreams.

FAQ -

1. What is the interest rate of PM Mudra loan?

What is the interest rate of Pradhan Mantri Mudra Loan? The interest rates for Pradhan Mantri Mudra Loan vary based on the category – Shishu, Kishor, or Tarun. Generally, they range from 8% to 12%.

2. Is a Mudra loan safe?

The loan that you avail under Mudra Scheme is guaranteed by Credit Guarantee for Micro Units (CGFMU) and provided by National Credit Guarantee Trustee Company (NCGTC). The cover is available for 5 years and hence the advises granted is for 60 months. You can view the leads on Udyami Mitra Portal.

3. Who is the Chairman/ Managing Director of MUDRA Bank?

Shri S. Ramann is the chairman/ managing director of the MUDRA Bank.