e-MUDRA Loans - Pradhan Mantri MUDRA Yojana (PMMY)

The establishment of MUDRA bank was announced by Hon'ble Finance Minister Shri Arun Jaitley during the Union Budget session of FY 2015-16. It was formed 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 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.

MUDRA loans that are applied online are called e-MUDRA Loans. E-MUDRA loans can be applied from a number of commercial and public sector banks, Small Finance Banks, NBFCs and MFIs. They can also apply online through the Udyami Mitra Portal. The loan scheme was introduced with the objective of aiding financial institutions to extend loans to the non-corporate non-farm sector income generating activities of micro and small entities (subject to those enterprises with credit needs below Rs.10 lakhs).

What are the goals and objectives of e-MUDRA Loans?

Large scale industries have never had any difficulty in securing credit for their enterprises, because of the perception that they offer the highest employment opportunities to the general population. It is shocking though, to find out that large industries employ only 1.25 crore people countrywide. It is the small scale industries, which falls under the unorganized sector, that employs around 12 crore people in this country. Despite this fact, they do not have adequate credit facilities. It is to combat this situation that the Prime Minister envisaged the Micro Units Development & Refinance Agency Ltd (MUDRA) scheme.

This scheme is primarily aimed at MSME units across the country. It was established with the sole purpose of funding and saving small entrepreneurs from abuse by money lenders and helping 1.5 crore new entrepreneurs in developing small businesses. The MUDRA scheme offers loans that do not need collateral. Under this arrangement there is no fixed rate of interest on the loans availed. Interest is charged at the base rate plus 1–7%. This can also be higher, depending on the risk involved and the profile of the customer.

The MUDRA scheme has been a boon to the MSME sector by giving collateral free financing to these budding enterprises.

Refinance support to banks and NBFCs to facilitate higher funds available for lending

Onward lending to business entities involved in manufacturing, trading, services, tractor financing, agriculture and allied activities, and two-wheeler loans

MUDRA also empowers MSME entities through financial literacy and other social support services in addition to financial assistance

MUDRA has three loan schemes under it – Sishu loan up to Rs. 50000, Kishore loan up to Rs. 5,00,000 and Tarun loan up to Rs. 10 lakh

What are the benefits of the MUDRA Scheme?

The MUDRA Yojana scheme offers the following advantages over other MSME financing schemes in the market:

There is no collateral needed for this loan, so you can borrow without losing any personal or business property.

In the event of default, the government assumes responsibility for paying the loan.

This loan is most beneficial to entrepreneurs looking to set up their micro enterprise.

You can use this loan to fund, develop and expand your company with up to Rs.10 lakh funding.

The MUDRA Yojana scheme is available for small businesses in both urban and rural areas.

Women borrowers can get better benefits due to lesser interest rates.

The tenor of the loan may be extended to even 7 years, or you may choose to repay your loan within a shorter period of time.

Helps you to meet the work capital needs of your company.

Being part of the Pradhan Mantri Jan-Dhan Yojana, this loan also allows you to take advantage of the overdraft facility balance of up to Rs.5000.

One can also apply for a MUDRA debit card that provides them with hassle-free instant access to funds.

What are the different categories under the MUDRA scheme?

The MUDRA Yojana has a few different schemes under different categories.

Micro-credit scheme: Micro-enterprises, self-help groups and joint-liability groups can get up to Rs.1 lakh through micro-finance institutions.

Women Enterprise Program: This program, also known as the Mahila Uddyami Yojana, offers interest rate concessions of up to 0.25% on loans to women business owners at affordable rates.

Refinance scheme for Banks: This scheme allows borrowers such as commercial banks, regional rural banks, and scheduled cooperative banks to refinance loans up to Rs.10 lakhs if they have provided micro-enterprises credit based on requirements.

MUDRA Card overdraft: This card provides beneficiaries to make the most of overdraft facilities in addition to allowing debit transactions and withdrawals from ATMs. It also makes a mechanism for cash-credit to access working capital financing.

Credit Guarantee Fund: This fund was created to provide finance to increase accessibility and ease of lending to micro units.

Equipment Finance Scheme: This scheme provides limited equipment finance with an emphasis on enabling businessmen to buy and update their machinery.

Basic Eligibility Criterion to apply for MUDRA Scheme

In order to apply for the e-MUDRA scheme, your business should be either one of the following:

Small manufacturing enterprises (MSMEs)

Shopkeepers

Fruit and Vegetable vendors

Artisans

'Activities allied to agriculture', e.g. pisciculture, bee keeping, poultry, livestock, rearing, grading, sorting, aggregation agro industries, diary, fishery, agriclinics and agribusiness centres, food & agro-processing, etc. (excluding crop loans, land improvement such as canal, irrigation and wells).

What is E-MUDRA?

The Government has been encouraging digital banking across the country. It has introduced a number of measures to ensure that most banking facilities are available on the digital platform. In order to provide a transparent application process for the MUDRA loan and to enable entrepreneurs to access these loans from their place of business, e-MUDRA was introduced.

Applicants can conveniently apply for the MUDRA loans online by choosing the desired loan amount and their preferred lender. As mentioned earlier, MUDRA loans are disbursed through banks, MFIs and NBFCs. With the online application process, the applicants can submit their loan application and other documents and also choose their preferred lending partner for a quicker loan application.

There are various ways to access e-MUDRA

Through the Udyami Mitra Portal

Through the MUDRA Mitra Portal

Through the Bank or Lending Institution’s official website – SBI, HDFC, ICICI, Bajaj Finserv, Lending Kart, etc;

How to apply for an e-MUDRA Loan?

The primary portal to apply for the e-MUDRA loan is via Udyami Mitra. This is the official portal setup by MUDRA for applicants to learn everything about this loan scheme, eligibility criteria, required documents and the application process.

The Loan process is as below:

Benefits of applying through Udyami Mitra

The benefit of applying through Udyami Mitra portal is that your application is viewed by multiple lenders at the same time.

HAVE – Hand Holding in a Virtual Environment - If you find any difficulties in filling the application form, you can choose a Hand Holding agency or person to help you (fees may be charged by the agency / person) with filling up the application

The loan processing is as below:

Step 1: Registering on the Portal – You have to fill in your basic details like name, email address, mobile number, address, business address and the required loan amount to register on the Portal.

Step 2: Submitting details pertaining to the business – The applicant has to submit financial details of the business unit. You have to include details on the proprietors, nature of the business, estimated profit, estimates of the machinery planning to be purchased, existing credit facilities and so on.

Step 3: Submitting supporting documents: The applicant is required to submit a self-attested copy of all the supporting documents. These documents have to be uploaded along with the application.

Step 4: Select the preferred lending partner: You can choose your preferred bank to process your application.

Once you are deemed eligible by the chosen 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.

Online Apply to Mudra lone yojna Click Here

Documents required to apply for e-MUDRA loans:

Proof of identity

The MUDRA loan documents list includes self-attested photocopies of:

Aadhaar card

PAN

Voter’s ID

Driving License

Passport

Valid photo ID card issued by a Government employer

Proof of address

Proof of address documents required for MUDRA loan include:

Utility bill (electricity, telephone, water, gas, post-paid mobile phone, property tax)

Aadhaar card

Passport

Voter’s ID

Bank passbook or latest bank account statement attested by officials.

Domicile certificate or certificate issued by a local government body (Municipality, Gram Panchayat, etc.)

Proof of business

Proof of business documents for MUDRA loan:

Certificate, license, registration, or any other documents confirming the business existence, address, and ownership.