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Introduction
MUDRA, was formed during the Union Budget session of FY 2015-16 with the main goal of empowering small businesses and entrepreneurs. Accordingly, it was launched by the Hon'ble Prime Minister Shri Narendra Modi on 8th April in 2015. There are several provisions under the scheme to assist the MSME sector, that will fully meet customer needs and will effectively cover certain locations that ordinary banks are unable to cover.
The scheme aims at providing loans up to Rs.10 lakhs to the non-corporate, non-farm small/micro enterprises. These loans are classified as MUDRA loans under PMMY (Pradhan Mantri Mudra Yojana). These loans are given by Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs. The borrower can approach any of the lending institutions mentioned above or can apply online through the Udyami Mitra Portal.
How to fill the application form for MUDRA Loans?
Before filling up the application form, applicants have to know the schemes under the MUDRA Loans:
Shishu: Start-ups seeking a loan of up to Rs. 50,000 can apply under this category. The rate of interest would be 10–12%.
Kishor: Unestablished business units seeking a loan amount of Rs. 50,000 up to Rs.5 lakhs can apply in this category and will have to bear an interest rate of 14–17%.
Tarun: Established businesses looking for expansion of their existing unit can apply for a loan under this category for funding of up to Rs. 10 lakhs. The interest rate ranges above 16%.
The applicant has to first determine the category under which they will be applying for the loan. For, the application form differs for each category.
How do you want to apply?
There are two ways to apply for a MUDRA Loan:
Online on the Udyami Mitra Portal / Mudra Mitra Portal or the official websites of banks and NBFCs offering this scheme. You fill in the details and upload the documents online.
Offline through the Bank or Financial Institution where you want to avail the loan from. You fill in the details on a paper form and submit the documents physically at your nearest branch.
This article will enumerate both the methods for the convenience of the reader.
Online application
- Determine the loan amount you want to apply for
- Based on the loan amount, you can choose the category under which the loan will be processed – Shishu, Kishor or Tarun
- Keep all the necessary documents ready before starting the application process. For the list of necessary documents, refer to the “List of Required Documents” section below.
- Once you have completed these preparations, click on “Apply”.
- On this page, you select the required loan amount and the scheme under which you want the loan to be processed.
- Once you select the scheme, you will be presented with the Personal Details and Address Details fields.
- You will be required to fill in your name, email address, mobile number & business address details.
- You have to then read the Terms & Conditions and click on the ‘I agree’ box.
- Once you fill in these details and hit submit. You will receive an email with your username and password to login to the portal and continue your application.
- You will be required to fill in the following details:
Step 1: Business Information
Step 2: Background Information of Proprietors / Directors
Step 3: Names of Associate Concerns and Nature of Association; Banking/Credit Facilities Existing; Credit Facilities Proposed
Step 4: Future Estimates; In case of working capital: Basis of cash credit limit applied; In case of term loan requirements: details of machinery/equipment
Step 5: Status regarding statutory obligations; Document attachments; Preferred Lender
Step 6: Declaration and the Submit button
- You can attach the scanned copies of the documents on Step 5. The portal accepts png, jpg, jpeg, bmp and pdf formats that do not exceed 5 MB in size.
- On Step 5, applicants are allowed to upload their credit rating from any one of the credit rating agencies.
- On Step 5, applicants are given an option to choose their preferred lender. They can choose their preferred bank or NBFC where they want their loan to be processed.
Offline Application Submission:
Step 1: Download the application from the MUDRA portal.
Step 2: It is very similar to the online form. Fill in all the relevant details clearly and neatly.
Step 3: Attach the necessary documents
Step 4: Submit it at your nearest lending partner (Bank or NBFC affiliated to the MUDRA program)
Loan processing:
Once you are deemed eligible by the bank to secure a loan under the Mudra Scheme, the loan is disbursed in the form of a pre-loaded Mudra Card that comes personalized with your name on it. This is a RuPay debit card that is attached to the Pradhan Mantri Jan Dhan Yojana Savings Account and allows you to conveniently withdraw from any ATM when purchasing for your business. The cash withdrawal limit is set at Rs. 25,000 per day and includes cash credit and current deposit accounts as well.
Documents required to be attached along with your MUDRA application:
- Business plan
- Identity proof – Aaadhar Card, PAN Card, driving license, Passport, etc.
- Residence proof – the electricity bill, property tax receipt, telephone bill, etc.
- Recent photographs – not more than six months’ old
- Quotation of the equipment/machinery to be purchased
- Name of the supplier
- Identity and address proof of the business, like a business license, tax registration, etc.
- Category proof, such as SC/ST/OBC, etc.
Collateral / Security
MUDRA loans are covered under the CGTMSE scheme of the government and hence do not require any security or collateral.
MUDRA Loan Interest Rate:
The interest rate applied on MUDRA loans are based on RBI defined MCLR (Marginal Cost of Lending Rate).
Up to Rs.50000:
- Micro Enterprises: MCLR + SP
- Small Enterprises: (MCLR + SP) + Bank Loan
Above Rs.50000 up to Rs.2 lakhs:
- Micro Enterprises: (MCLR + SP) + Bank Loan
- Small Enterprises: (MCLR + SP) + Bank Loan
Above Rs.2 lakhs up to Rs.10 lakhs:
- Micro Enterprises: (MCLR + SP) + Bank Loan
- Small Enterprises: (MCLR + SP) + Bank Loan
MUDRA Loan Application Form FAQs:
1. Who are eligible for the MUDRA credit facility? What kind of borrowers are covered under the MUDRA scheme?
This scheme primarily focuses on Non-Corporate Small Business Segment (NCSBS) comprising largely of proprietorship and partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits and vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.
2. Is MUDRA only for rural people or can people in urban areas also apply for a Mudra loan?
MUDRA loan caters to entrepreneurs from both the rural and urban areas. People in urban areas can also apply for a Mudra loan.
3. What is a Mudra Loan Card?
Mudra Loan Card is a Rupay card that has a credit limit up to the working capital portion of the Mudra loan, more commonly known as a Mudra Card. It can be used to make purchases for the business as a debit-cum-ATM card and also at POS terminals.
4. Do I need to submit any collateral for the MUDRA loan?
RBI has mandated that all loans up to Rs. 10 lakhs to the MSME sector will not need any collateral. Hence, MUDRA loans do not require any security or collateral. However, the lending bank may require the borrower to hypothecate (pledge) the stocks, machinery, movables, or any other items acquired with the money from the Mudra loan.