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The Scheme was launched at Vigyan Bhawan, New Delhi, on April 8, 2015, by Prime Minister Shri Narendra Modi to provide funds to non-corporate small businesses outside the ambit of other credit facilities. The Mudra loan has proved to be way too helpful to the Indians.
The PMMY is an initiative by the Department of Financial Services (DFS), the Ministry of Finance, and the Government of India.
Objective
The objective of PMMY is to enhance the credit flow to the MSME sector by providing refinance support at reasonable rates of interest. PMMY is an initiative to provide funding for micro-unit development. There is no collateral or security required before applying for the same.
Eligibility
The applicant should be a citizen of India and fulfil the eligibility criteria specified by SIDBI. The applicant must have any sort of business in the non-farming sector. The activities should be in the manufacturing, trading, service, or processing sectors. Moreover, the credit needs to be up to 10 Lakh rupees. For the same, they can approach an MFI, Bank, or NBFC.
As per recent data released by SIDBI during FY 2020-21, around Rs 3.22 lakh crore has been disbursed under this scheme so far, with an average ticket size of Rs 1.23 lakhs per loan sanctioned under the PMMY scheme across all sectors.
Mudra Loan Eligibility
Let us now look at how you would apply for the Mudra Loan. MUDRA loans are meant for small businesses. The scheme’s objective is to provide funding to non-corporate small businesses, promote entrepreneurship, enhance financial inclusion and create jobs.
Under PMMY, MUDRA provides loans that range from Rs 50,000 to Rs 1 Crore at an interest rate between 6.5% – 9%.
Who can apply for a MUDRA loan?
Citizens who belong to India are thinking of starting a business in a non-farm sector and generating income through manufacturing, trading, processing, or service sectors. Along with that, the credit needed for the same should be less than Rs. 10 Lakh. If these conditions are fulfilled, the person can approach either MFI, Bank, or NBFC to avail the Mudra Loan under the Pradhan Mantri Mudra Yojana.
Types of Loans
We will now be looking at the types of loans provided under the PMMY. The loans provided under the same are of three types. These are as follows-
- Shishu- This category covers loans up to Rs. 50K.
- Kishor- This category covers loans between 50K and 5 Lakh INR.
- Tarun- This category covers loans between 5 Lakh and 10 Lakh INR.
These types have been named Shishu, Kishor, and Tarun. The main reason behind these types of development is that the growth and development are different for different types of business.
The initiatives will be rolled out in phases over the next three years (2019-2022), with an estimated outlay of Rs 8 billion. The first phase will focus on creating an enabling environment for MSMEs through policy interventions, creating awareness among stakeholders, and providing technical support by apprising them of the various schemes available from different government departments.
The second phase will create a healthy ecosystem for MSMEs by creating clusters, improving access to finance, infrastructure development, etc. The third phase will promote innovation in MSMEs through knowledge-sharing platforms, incubation centres, etc.
The PMMY is a product of the Government of India and is being implemented by the National Housing Bank. The PMMY has been designed to provide a holistic solution to home buyers regarding financing, construction, and post-construction support. It provides for interest subsidy up to 4% per annum on the principal loan amount for first-time home buyers. In addition, it also provides for capital subsidy under specific schemes like Pradhan Mantri Awas Yojana (Urban) and Pradhan Mantri Awas Yojana – Gramin (Rural).
It must be noted that no subsidy would be granted when a loan is taken under Mudra Loan. But there is one condition. The loan proposal is linked with other government schemes where the Government would provide the capital subsidy. That particular loan proposal would also be eligible for the Pradhan Mantri Mudra Yojana. The guidelines mentioned under the Mudra Loan say that there is no subsidy for a loan under this category.
Several schemes provide capital subsidies to farmers. If your project falls into one of these schemes, and you want to avail a loan through the PMMY portal, you will get capital and interest subsidy on your loan amount.
Conclusion
Suppose the borrower is a woman entrepreneur or belongs to SC (Scheduled Caste) or ST (Scheduled Tribe) category, she would get additional benefits such as concessional interest rates and priority in processing applications.
