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Introduction

Bank of India Mudra Loan is a special financial assistance product that helps many small and micro business units fund their needs and get them into the formal banking system. These small units depend on informal channels and unreliable set-ups for funding their business. Affordable credit is extended to these business units under the Pradhan Mantri Mudra Yojana scheme. This scheme aims at supporting micro business units who have credit requirement less than Rs. 10 lacs and help them develop their businesses. More details can be read below.

What is Mudra Loan?

Bank Of India Mudra Loan

Mudra Loan offers refinancing support to Micro, Small and Medium Business Enterprises under the scheme of Pradhan Mantri Mudra Yojana. There are two types of Mudra Loans available:

  • Micro Credit Scheme: This loan is offered mainly through the Micro Finance Institutions who offer a credit up to Rs. 1 lac to micro and small enterprises.
  • Refinance Scheme for Banks/NBFCs: Banks such as commercial banks regional rural banks, small finance banks etc. can receive refinancing assistance from Mudra for the loans given to micro business units. The refinance support is available up to Rs. 10 lacs for term loans and working capital. Loans to women entrepreneurs are encouraged and 0.25% discount is offered in the interest rates from Mudra.

Mudra Loans can be utilised for working capital loan, equipment finance for micro units, transport vehicle loans, business loan for traders, shopkeepers, vendors etc.

Bank of India Mudra Loan – Features

Bank of India Mudra Loan offers financial assistance to small and micro business units to set up or expand their business. Some of the main features of this product are:

  • Bank of India Mudra loan can be availed by businesses in the manufacturing, processing, trading and services. This also includes allied agricultural activities, financing to weavers and artisans.
  • There are three types of loans available:
CategoryLoan Amount
ShishuLoans up to Rs. 50,000
KishoreLoans between Rs. 50,000 and Rs. 5 lacs
TarunLoans between Rs. 5 lacs and Rs. 10 lacs
  • Repayment of the loan can be done for a maximum of 36 months for demand loans and 84 months for term loans.
  • The Shishu category of loan has 0% margin whereas Kishore and Tarun categories have a margin of 15%.
  • Bank of India requires hypothecation of all assets which has been acquired out of bank finance. Personal guarantee of directors/promoters are also required.
  • There is a need for collateral security when taking this loan.
  • The interest rate of Bank of India Mudra Loan is linked to MCLR.

Bank of India Mudra Loan – Eligibility

Bank of India Mudra Loan has certain eligibility criteria which has been mentioned below:

  • Any individual can apply for Mudra loan.
  • This includes women, proprietary concerns, partnership firms and private limited companies can apply for this loan.

The following documents are required for Bank of India Mudra Loan:

  • Proof of identity - Self certified copy of Voter’s ID card / Driving License / PAN Card / Aadhar Card/Passport.
  • Proof of Residence - Recent telephone bill, electricity bill, property tax receipt (not older than 2 months), Voter’s ID card, Aadhar Card & Passport of Proprietor/Partners/Directors.
  • Proof of SC/ST/OBC/Minority. 
  • Proof of Identity/Address of the Business Enterprise -Copies of relevant licenses/registration certificates/other documents pertaining to the ownership, identity and address of business unit.
  • Applicants should not be defaulter in any Bank/Financial institution. 
  • Statement of accounts (for the last six months), from the existing banker, if any.
  • Last two years balance sheets of the units along with income tax/sales tax return etc. (Applicable for all cases from Rs.2 Lacs and above).
  • Projected balance sheets for one year in case of working capital limits and for the period of the loan in case of term loan (Applicable for all cases from Rs.2 Lacs and above).
  • Sales achieved during the current financial year up to the date of submission of application.
  • Project report (for the proposed project) containing details of technical & economic viability.
  • Memorandum and articles of association of the company/Partnership Deed of Partners etc.
  • In absence of third-party guarantee, Asset & Liability statement from the borrower including Directors & Partners may be sought to know the net-worth.
  • Photos (two copies) of Proprietor/ Partners/ Directors.

FAQs

1. What is Bank of India Mudra Loan?

Bank of India Mudra Loan helps small and micro business enterprises fund their business needs. This product also helps these scattered units to come into the formal banking fold.

2. What are the eligibility criteria to apply for Bank of India Mudra Loan?

Bank of India Mudra Loan can be applied by any individual including women, proprietary concerns, partnership firms and private limited company.

3. Is there a requirement of collateral security for Bank of India Mudra Loan?

Yes, Bank of India requires collateral security to be given for Mudra Loan.

4. What are the documents required for Bank of India Mudra Loan?

The following documents are required for applying to Bank of India Mudra Loan:

  • Proof of identity 
  • Proof of Residence 
  • Proof of SC/ST/OBC/Minority. 
  • Proof of Identity/Address of the Business Enterprise 
  • Applicants should not be defaulter in any Bank/Financial institution. 
  • Statement of accounts (for the last six months), from the existing banker, if any.
  • Last two years balance sheets of the units along with income tax/sales tax return etc. (Applicable for all cases from Rs.2 Lacs and above).
  • Projected balance sheets for one year in case of working capital limits and for the period of the loan in case of term loan (Applicable for all cases from Rs.2 Lacs and above).
  • Sales achieved during the current financial year up to the date of submission of application.
  • Project report (for the proposed project) containing details of technical & economic viability.
  • Memorandum and articles of association of the company/Partnership Deed of Partners etc.
  • In absence of third-party guarantee, Asset & Liability statement from the borrower including Directors & Partners may be sought to know the net-worth.
  • Photos (two copies) of Proprietor/ Partners/ Directors.

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13 May 2020

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13 May 2020

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