Under the Pradhan Mantri Mudra Yojana (PMMY), the Micro-Units Development and Refinance Agency (MUDRA) was established in April 2015 to assist and support Small and Micro-business units. The Mudra scheme was introduced with a budget of INR 20,000 crores. Also popular as Mudra Loan Yojana or Mudra Bank Scheme, credit items from MUDRA, called as Mudra loans.
The eligibility conditions and process for applying for the Pradhan Mantri Mudra loan are also slightly different for the different banks. Applicant must collect the application form from the bank of his / her choice and ask about the conditions of eligibility to ensure that he/she follows the process accurately and has better chances of obtaining loan approval.
The banks that provide Mudra loans carefully pick the applicants and approve loans for businesses that have a lot of growth potential and can provide other people with future job opportunities. The Mudra loan scheme was introduced to provide small business owners with sufficient financial assistance.
This is one of the main steps taken by the government to ensure that small business owners do not have to rely on personal networks and private lenders because they often charge high-interest rates and enforce unfair conditions.
Such small business owners can easily take advantage of a government-approved finance institution’s Mudra loan at a low-interest rate. The benefit is that borrowers don’t need collateral/insurance or any third-party guarantee in order to apply for a mudra loan scheme.
In addition to creating job opportunities for thousands of people across India, the initiative will help to boost the MSME sector and make it a key contributor to GDP growth.
A few conditions which a small business must fulfil in order to meet the Mudra loan eligibility criteria are listed here:
PMMY is illustrative of the list of items that you can secure under Mudra loans. Micro, small and medium-sized enterprises in these industries must meet the eligibility requirements for Mudra loans and may apply for Mudra loans.
The maximum amount of that business owners can claim under a Mudra loan is INR 10 lakhs. A company can only apply for up to INR. 50,000 (Shishu loan) loans. A business that needs capital to develop itself is eligible for INR. 50,000 to INR. 5 lakh (Kishor loan) loan. While an existing company that needs capital for expansion may apply for INR 5 lakh Mudra loan to INR 10 lakh (Tarun loan).
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