The Pradhan Mantri MUDRA Yojana (PMMY), launched on April 8, 2015, by Prime Minister Narendra Modi, is a collateral-free micro credit scheme. The initiative enables loans of up to Rs 10 lakh to non-corporate, non-farm small and micro entrepreneurs for income-generating activities. The loans under the scheme are provided by member lending institutions (MLIs) including banks, non-banking financial companies (NBFCs), micro finance institutions (MFIs) and other financial intermediaries.
Read More: GST panels propose slew of tax tweaks; rate changes likely for 100+ products
Credit provided under the scheme is for both term loan and working capital requirements in manufacturing, trading and service sectors, including activities allied to agriculture such as poultry, dairy, beekeeping, etc. The interest rate for the loan raised is decided by MLIs while in case of working capital facility, interest is charged only on money held overnight by borrower.
Importantly, lenders may seek an upfront fee or processing charges as per their internal guidelines. The charges for Shishu loans (covering loans up to Rs 50,000) are waived by most banks, according to the government.
As of October 21, 2024, 2.24 crore Mudra loans involving Rs 2.15 lakh crore were sanctioned in the current financial year, of which Rs 2.09 lakh crore loans were disbursed, as per data from the scheme’s website.
Read More: Your Diwali gift and bonus can be taxable: Know ways to avoid it
For borrowers looking to apply for Mudra loan, here’s the online process:
- Visit the government’s Jan Samarth portal and click on ‘Business Activity Loan’ from the ‘Schemes’ dropdown and then click on ‘Pradhan Mantri Mudra Yojana’
- Scroll down the page and click on ‘Check Eligibility’
- Select ‘Other Business Loan’ if you are not a handloom weaver or manual scavenger or street vendor
- Enter details such as new or existing business, type of business, your social category, location, the estimated cost to start or grow your venture and the amount you are willing to invest from your own source
- The portal will then calculate and show up the loan amount you are eligible for. For example, if the estimated cost of your project is Rs 2 lakh and you can invest Rs 50,000 from your end, the loan amount you would be offered is Rs 1.5 lakh
- Click on ‘Calculate Eligibility’ to get details about monthly EMI and loan tenure
- Click on ‘Login to Apply’; log in with your registered mobile number
- Go through ‘Privacy Policy’, ‘Terms & Conditions’, and ‘Disclaimer’; accept all and click on ‘Next’
- Click on ‘Proceed’ under the Mudra scheme dialogue box
- Review the details you provided and Click on ‘Continue’
- The application page will come up showing the necessary documents required; agree to all documents and click on ‘Agree & Proceed’
- Verify your identity with PAN, Udyam registration and Aadhaar details and click on ‘Proceed’
- The portal will fetch your GSTIN details but if the business is not GST-registered, it will ask for reasons such as whether GST is not applicable to your product or service, GST is not applicable in your state, GST is not required because sales is below registration limits and other reason
- Click on ‘Proceed’ to enter your business details and monthly sales data and again click on ‘Proceed’
- Enter other business details and click on ‘Proceed’ to submit your bank details either through bank statements or by verifying your bank account
- Click on ‘Verify’ and on the next page enter details around the number of employees, business address, whether you have any existing loan, details of existing lenders, etc.
- After entering the details, it will show that your form is ‘Complete’ and can be submitted
- Once submitted, the portal will share the loan offers from various banks with the rate of interest and loan tenure
- Click on ‘Select Offer’ for the relevant loan offer
- Once your loan application is approved digitally by the selected bank, the latter will undertake the sanctioning process which might include branch visits for any clarification or error in documents in order to disburse the loan
