Mudra loan is a Government of India undertaking, which was started to provide financial support to small businesses in the country. Under this scheme, loans are provided by banks to non-corporate, non-farm sectors whose credit needs are upto Rs. 10,00,000.
Even though all banks and NBFCs have come together for this particular initiative, their individual repayment policies remain the same. Every financial institution has its own set of repayment terms which needs to be accepted by the borrower when availing the loan. If a borrower is unable to repay a loan, the lender will pursue him/her to pay back the loan. As a result, the person’s credit score will also take a hit. If you find yourself in such a situation, it’s best to contact the lender and explain to them your financial situation. Some of the lenders will give you a short-term relief from repayment. This way, you can buy in some time to arrange for the necessary amount.
Additional Reading: How to apply for a MUDRA loan?