Interested in financial products


Mudra has become a very common and foremost name in the field of MSME lending. Mudra loans are part of the Pradhan Mantri Mudra Yojana initiated by the Honourable Prime minister in the year 2015. The scheme is targeted for the small businesses that generally face borrowing issues on account of lower requirement of loan amount or on account of inadequate documentation or collateral. This scheme aims to address all the issues faced by the micro, small and medium businesses while seeking funds to start a new organization, sustain it or even grow.

Eligibility for Mudra Loans

The eligible persons under this scheme are the small businesses that are considered as MSME units as per the MSMED Act, 2006. This includes all the businesses involved in manufacturing, trading, service related activities or even agriculture allied activities provided they are income generating avenues.

The applicant is required to be between the ages of 18 years and 65 years to be eligible for a loan under the scheme and should possess the necessary skill or qualification or talent to set up a new business and to sustain it and eventually grow.

Another important requirement is that the applicant should not have been a defaulter with any financial institution.

The list of eligible applicants under the scheme can be found below.

  • Professionals
  • Business owners
  • Traders/ Shopkeepers
  • Manufacturers
  • Startups
  • Small Industries

The above list is not exhaustive in nature, it is a merely suggestive list.

Documents under Mudra Loans

The documentation process for Mudra loans under PMMY is very simple, quick and hassle free requiring minimum documents in order to shorten the processing time of the loan. This is to ensure that maximum MSME units can avail the benefit of the loans under PMMY and are not turned away by the lender for want of unnecessary and extra documentation.

The details of documents required under PMMY are,

  • Identity Proof (Passport, PAN Card, AADHAR Card, Voter’s ID Card, Driving License, Central and State Government issued Photo ID Proof, etc., proof of being from a special category like SC/ ST/ OBC, Minority ,if applicable, also to be provided).
  • Address Proof (AADHAR Card, Ration Card, Bank Account Statement, Rent or lease agreement, Telephone Bill, Electricity Bill, Water Bill which is not more than 3 months old, etc.
  • Income Proof (Latest Salary Slips, ITR, Form 16)

Some lenders require a few additional documents if the loans are required for working capital or if the loan is sought under Kishor or Tarun Loan Schemes. These additional documents are detailed as under.

Documents relating to Business Proof

  • Business address proof
  • Business registration certificate
  • Proof of continuity of business
  • Director Identity Number or DIN for all the Directors, if any.
  • Photographs of the Applicant(s) or Director(s) or each of the partners
  • Total experience in the current line of business
  • Last 2 years actual sales
  • Projected sales figures, details regarding revenues, debtors and creditors of the entity, working cycles, inventories, promoter’s contribution, etc.
  • 2 years income tax returns
  • 12 months bank statements
  • Current financial year sales records
  • For a loan amount of more than Rs. 2,00,000 the applicant must provide the unaudited balance sheet of the previous year
  • Assets and liabilities statement of the company
  • Memorandum of Association (MOA), Articles of Association or Partnership Deed
  • Statuses regarding the Statutory Obligations have to be provided. E.g. Registration under the Shops and Establishment Act, Registration under MSME, latest Sales Tax filed, etc.

Details relating to the existing and proposed Banking and Credit facilities of the borrower

  • Types of facilities for savings bank account, current account, cash credit account, term loan account, letter of credit or bank guarantee
  • Current bank details
  • The total limit already availed and the amount proposed
  • The purpose of loan to be availed

Details required in case of Term loan for purchase of an Asset or equipment

  • Type and purpose of such asset/equipment
  • Name of the supplier and the quotation of such asset or equipment
  • Promoter’s total contribution

Features of the Scheme

Some of the features that make PMMY a very sought after scheme by the small businesses are highlighted below.

Loan amount

The loans under the PMMY are categorized under three heads/schemes. The basis of these categories is the amount of loans as well as the purpose of loans i.e. the stage of the business for which the loan is required.

Shishu Scheme

Loans under this scheme are for the very first stage of business, the beginning. Borrowers can get up to Rs. 50,000 as loans under this scheme. The rate of interest is comparatively lower than the other schemes under PMMY. The tenure of the loans can be up to 5 years.

Kishor Scheme

This scheme is for the business sustenance stage. Loans under this scheme can be for working capital or a term loan or a combination thereof. The tenure of the loan is up to 5 years but can be increased up to 7 years at the lender’s discretion. The loan amount available under the scheme is from Rs. 50,001 to Rs. 5,00,000.

Tarun Scheme

This is the highest loan scheme available under PMMY. Loans under this schema can be from Rs. 5,00,001 to Rs. 10,00,000. The rate of interest is higher as compared to the previous two schemes under PMMY and also the tenure can be extended to 7 years at the bank’s discretion from the normal tenure of 5 years available in general. Borrowers can seek loans under this scheme for growing their business organization, development of a new line, diversification or expansion or buying as new plant and machinery or equipment that will lead to a growth of the business unit

Rate of interest

The rate of interest under PMMY is usually lower as compared to other business loan products offered by the Banks and the NBFCs. The rate of interest generally starts from 8.65% and goes upwards depending on the lender and the scheme. Recently the Government of India has provided a relief to the small businesses that are hit by the ongoing Coronavirus Pandemic in the form of an interest subvention of 2% on loans under the Shishu scheme. This measure will provide huge relief to the small entities that are going to face huge issues due to suspension of business activities during the lockdown as well as the demand issues post it.


Loans under PMMY are collateral free. This ensures easy and timely access to the funds for the small business owners and ensures that their ownership remains intact and is not diluted for want of collateral by the lending institutions.


The tenure for Mudra loans can be from 3 years to a maximum period of 5 years across all the schemes under PMMY. The tenure can be further extended to maximum 7 years upon a request by the borrower to the lender and at the lender’s discretion.

Processing cost

The processing cost under PMMY is zero or a nominal charge as a percentage of the loan amount depending on the lender.

FAQs – Mudra Loan Documents

1. What is the minimum amount of loans under PMMY?

There is no minimum amount of loan specified under PMMY.

2. What are the basic KYC documents required for Mudra Loans?

The basic KYC documents for Mudra Loans are,

  • Identity proof of the applicant
  • Address proof of the applicant
  • Income proof of the applicant
  • Business proof of the applicant
  • Recent Passport Size Photographs

3. What is the turnaround time of Mudra Loans?

The turnaround time of Mudra Loans is 24-48 hours maximum as these loans require lesser processing time.

4. Who can avail Mudra Loans?

Mudra Loans can be availed by any small business units registered under MSMED Act, 2006.

5. What is the maximum loan available under Mudra Scheme?

The maximum amount of loans under Mudra Scheme is Rs. 10,00,000.

×Thank you! Your comment will be reviewed and posted shortly.