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Introduction

The Indian MSME sector serves as the backbone of our economy. MSME entrepreneurs and workforce have continuously acted as the Indian economy's stabilizing force, providing it with strength to survive global economic shocks and adversities. It has strengthened the country with more than 63.4 million units across the country, contributing around 6.11% of manufacturing GDP and 24.63% of GDP from service activities as well as 33.4% of manufacturing output from India. They provide the largest employment opportunities to around 120 million people and contribute about 45 percent of India's total exports.

The Government of India, in its continuous efforts in boosting this sector and regularizing it to a much larger level, has introduced a number of schemes. The Pradhan Mantri MUDRA Yojana (PMMY) scheme is one such scheme set up with the sole purpose of creating easy access to the rural entrepreneurs to affordable financing and helping to lower their financing costs.

What is MUDRA?

Icici Bank Mudra Loan

As per Department of Financial Services, Ministry of Finance, Govt. of India’s letter No.27/01/2015-CP/RRB dated May 14, 2015 loans given to non-farm income generating enterprises in manufacturing, trading and services whose credit needs are below Rs.10 lakh by all the Public Sector Banks, Regional Rural Banks, State Cooperative Banks and Urban Co-operative Banks will be known as MUDRA loans under the Pradhan Mantri MUDRA Yojana (PMMY). All such loans can be covered under refinance and/or credit enhancement products of MUDRA.

In addition to these banks, NBFCs and MFIs operating across the country can also extend credit to this segment, subject to their compliance with the approved eligibility criteria, for which they can avail financial assistance from the MUDRA scheme.

So far, MUDRA has enrolled 27 Public Sector Banks, 17 Private Sector Banks, 27 Regional Rural Banks and 25 Micro Finance Institutions as partner institutions to channel support to the ultimate borrower based on eligibility criteria. ICICI Bank Ltd. is one of those banks offering the MUDRA loan to eligible borrowers

Key features of the MUDRA Loan offered by ICICI Bank

  • All Non-Corporate Small Business Segment (NCSBS) comprising of proprietorship or partnership firms operating as small-scale manufacturing units, service units, shopkeepers, fruit / vegetable vendors, truck operators, food service units, repair shops, machine operators, small-scale industries, food processors and others in rural and urban areas are eligible for MUDRA assistance.
  • All branches of ICICI Bank are equipped to process loans under Mudra scheme as per customer requirements.
  • MUDRA loan is disbursed under 3 different categories, based on the size of the enterprise and the loan amount required
  • Shishu – Loans up to Rs.50000, with rate of interest being 1% per month or 12% per annum. Repayment period 5 - 7 years.
  • Kishore - Loans from Rs.50001 up to Rs.5 lakhs. The interest rate would depend on the lender, keeping the applicant's credit history in mind in compliance with the scheme guidelines. Repayment duration depends on the bank's discretion.
  • Tarun - Loans from Rs.5 lakhs to Rs.10 lakhs. The interest rate would depend on the lender, keeping the applicant's credit history in mind in compliance with the scheme guidelines. Repayment duration depends on the bank's discretion.
  • Term loan & cash loan facility of up to Rs.10 lakh to non-farm units engaged in manufacturing, trading and service activities.
  • Financing of up to Rs.10 lakh for the food products sector, activities allied to agriculture and services in these areas included under PMMY.
  • No requirement of collateral & third party guarantee.
  • Borrowers under this scheme can opt to receive a MUDRA Debit Card for instant access to funds. They will be provided with a Rupay Debit Card with various features and benefits.

Mudra Loans from ICICI Bank can be utilized for the following purposes:

Vehicle loan: For purchase of Commercial vehicles, Cars and Two-wheelers

Business Instalment Loan (BIL): Loans for working capital requirement, buying plants and machinery, renovating offices etc.

Business Loans Group Loans (BLG) and Rural Business Credit (RBC): Facilities of Dropline overdraft/Overdraft facility/Working capital loans

ICICI Bank Mudra Loans Interest Rates

Interest Rates - 11.49% – 17.50%

Maximum Tenure - 1-5 years

Eligibility criteria to apply for MUDRA Loan with ICICI Bank

The MUDRA loan is primarily instated targeting Non –Corporate Small Business Segment (NCSBS) comprising of millions of proprietorship and partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits & vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.

The Finance Minister reiterated that while the lending target were scaled up, the scheme would focus on women, backward classes, minorities, Dalits, and tribal who were not usually given the appropriate opportunity to get finances for their businesses.

How to apply for MUDRA loans with ICICI Bank?

  • Borrowers who wish to seek assistance under Pradhan Mantri MUDRA Yojana (PMMY) may approach the nearest branch of ICICI Bank. Online application is not available at this time.
  • Submit the duly filled application form along with supporting documents for the purpose of the loan.
  • Submit all relevant documents required for a speedy and hassle free process.
  • Upon satisfactory documentation, sanction letter is issued for your enterprise.
  • You can get the loan amount disbursed in your account directly.

Documents Required for MUDRA Loans through ICICI Bank

Vehicle Loans

  • Mudra application form
  • Vehicle loan application form
  • 2 passport size colour photographs
  • Photo Identity proof
  • Address proof
  • Income proof
  • Bank statement (last 6 months)

Business Instalment Loan

  • Mudra application form
  • BIL application form
  • Photo identity proof
  • Address proof
  • Establishment proof
  • Bank statement (last 6 months)
  • Ownership proof of residence/office
  • Proof of continuity of business
  • Proof of qualification
  • Trade references
  • 2 years ITR
  • CA certified financials

Business Loans Group and Rural Business Credit

  • Mudra application Form
  • BIL/RBC application form
  • Photo identity and age proof
  • Address proof
  • Ownership proof of residence/office
  • Business vintage proof
  • Bank statement (last 12 months)
  • Income tax return (last 2 years)

What is the objective of the MUDRA loan?

The core objective of the MUDRA Loan is making timely financing accessible and affordable for MSME units in urban and rural areas. It attempts to distribute maximum benefits through the following objectives:

  • Act as an authority to streamline the MSME sector by developing comprehensive policy guidelines
  • Registering and regulating all the Microfinance Institutions by bringing them under the same umbrella
  • For the progress and development of the small businesses sector
  • Timely assistance to lower income groups in building and expanding their business
  • To boost lending to the SC/ST entrepreneurs
  • Act as a regulatory body for all Microfinance Institutions that are dealing with trading, manufacturing, and services

FAQs: MUDRA Loans from ICICI Bank

1. What is MUDRA?

MUDRA, which stands for Micro Units Development & Refinance Agency Ltd. is a financial institution set up by Government of India for development and refinancing of MSME Units. It was announced by the Hon’ble Finance Minister while presenting the Union Budget for FY 2016. The purpose of MUDRA is to provide funding to the non-corporate small business sector through various Last Mile Financial Institutions like Banks, NBFCs and MFIs.

2. What are the roles and responsibilities of MUDRA?

MUDRA would be responsible for refinancing all Last Mile Financiers such as Non-Banking Finance Companies, Micro Finance Institutions, Societies, Trusts, Section 8 Companies [formerly Section 25], Small Finance Banks and Regional Rural Banks which are in the business of lending to micro/small business entities engaged in manufacturing, trading and services activities as well as Agri-allied activities. MUDRA would also partner with State/Regional level financial intermediaries to provide finance to Last Mile Financier of small/micro business enterprises.

3.What is the rate of interest charged by MUDRA?

MUDRA is a refinancing agency which will extend its funds to Last Mile Financiers to enable them to reach out to the sector. It will use a variety of innovative financing means including technology to bring down the cost of funding for the ultimate borrower. However, the rate of interest on the loans shall be determined by the lending institution based on the credit status of the applicant.

4. I have graduated recently. I want to start my own business. Can MUDRA help me?

MUDRA loans are available in three categories. For small business, loans up to Rs.50000 is available under the 'Shishu' category and beyond Rs.50,000 and up to Rs.5 lakh under the 'Kishor' category. It also offers loans beyond Rs.5 lakh and up to Rs.10 lakh under the Tarun category. Depending on the nature of business and project requirements you can access finance from one of the intermediaries of MUDRA as per the norms.

5. Are carpentry and RO water plant installation eligible for the loan? If so, what is the maximum and minimum amount of loan?

Carpentry and RO water plant installation, on a business mode, are eligible activities under MUDRA loan, if the loan amount is up to Rs.10 lakh The primary requirement for availing a MUDRA loan is to be an income generating activity under manufacturing, processing, trading and service sector as well as Agri-allied activities.

End Note:

MUDRA aims at bringing last mile financial support to the rural and underserved areas of the country. It helps in the progress and development of MSME units that have provided large employment opportunities in these underdeveloped areas in the rural populace. These collateral free loans, up to an amount of Rs.10 lakhs, have helped a number of established as well budding entrepreneurs in realizing their dreams of setting up their own business unit.

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