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Introduction

The State Bank of India has implemented various Government schemes to deliver financial aid to deserving borrowers. The MSME loan division has a number of schemes aimed at budding as well as established business aspirants. The Pradhan Mantri Mudra Yojana (PMMY) is one such scheme that is operated by SBI.

Pradhan Mantri MUDRA Yojana (PMMY) is a scheme initiated by the Honourable Prime Minister on April 8, 2015 to provide credit facility to Non-Corporate, Non-Farm MSME units with loans of up to Rs.10 lakh. The Pradhan Mantri Mudra Yojana is a collateral-free loan that can be used by individuals who need funds for business needs, expansion purposes, company set-up or establishment modernization, etc. This credit can be utilized for setting up a new business unit or for expanding an existing enterprise.

MUDRA stands for Micro Units Development & Refinance Agency Ltd. It is a financial institution set up by Government of India for development and refinancing of Micro Unit enterprises. 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 deserving borrower based on eligibility criteria.

The State Bank of India offers a number of SME loans including the Pradhan Mantri Mudra Yojana (PMMY).

Snapshot of the MUDRA loan by SBI

Sbi Bank Mudra Loan

Nature of credit

Offered as a Term loan or Working capital

Purpose

Capital for start-ups, modernisation of existing units, expansion of unit, purchase of equipment and machinery

Eligible borrowers

Entrepreneurs looking to setup a new business or by established, profit making entities, to expand their business.

Quantum of loan

Maximum loan amount: Rs.10 lakh

SHISHU category - Loans up to Rs.50,000

KISHORE category - Loans from Rs.50,001 to Rs.500,000

TARUN category - Loans from Rs.500,001/- to Rs.10,00,000/-

Repayment tenure

3 –5 years

Processing fee

Nil for Shishu and Kishore loans

0.5% of the loan amount for Tarun loans

Margin

Nil for loan up to Rs.50,000

10% for loan amount from Rs.50,001 to Rs.10 lakh

Interest rates

Linked to MCLR rates

Collateral security

No collateral required. However, as Primary Security, hypothecation of P&M for Term loans and hypothecation of stocks and receivables for Cash credit to be done.

Features of MUDRA loan by SBI

MUDRA Loans are basically of 3 categories. Applicants can apply in the appropriate category based on their needs.

Shishu – Loans up to Rs.50000, with rate of interest being a minimum of 1% per month or 12% per annum. Repayment period of 1-5 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 but not to exceed 5 years.

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 but not to exceed 5 years.

The loan that you avail under Mudra Scheme is covered by Credit Guarantee for Micro Units (CGFMU) and provided by National Credit Guarantee Trustee Company (NCGTC) and hence does not need any collateral.

The maximum repayment tenure for the loan is 5 years including a moratorium of up to 6 months depending on the activity & income generation capacity of the unit. Annual review shall be conducted.

Cash credit account holders will be issued a Mudra RuPay card for instant access to funds.

Funding needs based on the stage of growth and development of the micro unit & entrepreneur’s merit

Competitive interest rates in the market determined based on the applicant’s credit profile

MUDRA Loan Eligibility Criteria for SBI Bank

MUDRA Loans can be availed by entrepreneurs looking to setup a new business or by established, profit making entities, to expand their business. The loan can be applied by the following people engaged in Non–Corporate Small Business Segment (NCSB) from both rural and urban areas. This segment comprises of millions of proprietorship  or 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.

Start-up applicants should present a viable business model, depicting the profit making ability of the business model to avail this loan. Start-ups are usually categorized under the Shishu scheme and get up to Rs.50000 loan amount.

Established business units, already into profit making, can apply under the Kishor and Tarun categories for credit towards expansion of business or upgradation of machinery and equipment. These applicants have to submit proof of profits and also substantiate the need for machinery and equipment upgradation. They have to explain how this expansion or upgradation can help in bettering their profits and also create more employment opportunities.

How to apply for MUDRA loans from SBI Bank?

Existing customers of SBI, maintaining Saving Bank or Current Account (Individual), can apply for e-MUDRA loan amount up to Rs. 50,000 online on their official website or by clicking on the link: SBI e-Mudra Loan. The applicant should be between 18 and 60 years of age. The deposit account should have been active for a minimum of 6 months.

Others can approach the nearest branch of SBI for submitting the application.

Documents Required for SBI Mudra Loan

ID Proof: Voter’s ID card, Driving License, PAN Card, Aadhaar Card, Passport or Photo IDs issued by a Government authority.

Residence Proof: Recent telephone or electricity bill, property tax receipt, Voter’s ID card, Aadhaar Card, Passport, and Certificate issued by a government authority, local Panchayat or municipality, among others.

Bank Statement: Last 6 months’ bank statements from their existing bank, if any.

Quotations for proposed purchase of equipment or machinery: The application should be accompanied by the quotation for the machinery and other items that have to be bought for the business.

Photograph: 2 recent passport size photograph of the applicant.

Caste certificate in case of SC, ST, OBC, or minority group, if applicable.

Business Proof: These may include copies of relevant licenses, registration certificates, and lease or rent agreements, or other documents that are establish the ownership, identity and address of the business unit. Businesses with Udyog Aadhaar Memorandum can submit the same also.

Income Tax Documents: IT returns of past 2 years for individuals and business entities should be submitted.

Additional Benefits

Borrowers can opt to get RUPAY Debit Cards named as MUDRA Card for cash withdrawals & PoS transactions. Their features under each of the 3 categories is given below:

LimitShishuKishorTarun
Daily cash withdrawal limits10,00015,00020,000
Daily POS Limit15,00025,00030,000

FAQs: SBI MUDRA Loan

1. Who are eligible for this credit facility from MUDRA? 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.What kind of assistance can one get for food processing units?

Food Processing is very much covered under one of the MUDRA schemes. Please contact your nearest SBI Bank to know more about the relevant scheme. You can avail assistance under MUDRA schemes as per your requirements.

3.The MUDRA loans give priority to women, Dalits and SC/ST. I am a woman who has completed Beauty Parlour training and would like to set up my own beauty parlour. Which category of MUDRA should I apply loan with?

The Mahila Uddyami Scheme is specially designed for women entrepreneurs and is covered under MUDRA. Under this scheme, women can avail assistance under all three groups, viz. 'Shishu', 'Kishor' and 'Tarun'. Please approach the nearest branch of SBI Bank with your business proposal and supporting documents. They will let you know of the best interest rates and other offers to suit your needs. Please check Website for more information for eligible businesses under each category.

4. Is MUDRA only for rural people or can people in urban areas also apply for an SBI Mudra loan?

MUDRA loan caters to entrepreneurs from both the rural and urban areas. People in urban areas can also apply for an SBI Mudra loan.

5. What is a Mudra Loan Card?

Mudra Loan Card is a credit card that has a credit limit up to the working capital portion of the SBI 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.

6. Does SBI require any collateral for the MUDRA loan?

State Bank does not require any collateral from the borrower, as RBI has mandated that all loans up to Rs. 10 lakh to the MSE sector will not need any collateral. The bank however requires the borrower to hypothecate (pledge) the stocks, machinery, movables, or any other items acquired with the money from the SBI Mudra loan with the bank for the tenure of the loan.

End Note:

The Pradhan Mantri Mudra Yojana scheme is an ideal choice for individuals who are in need of funds to finance their various business-related requirements. Through this scheme, MSMEs in the country have better access to funds. Individuals in need of funds for business requirements can avail loans under the PMMY scheme at an affordable rate of interest. It has helped in generating employment and the growth of GDP. With no collateral requirement and competitive interest rates, the MUDRA loan is the most effective form of obtaining credit to realize your entrepreneurial dream.

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