Finance Minister Nirmala Sitharaman announced that the government has extended a staggering 43 crore loans, amounting to ₹22.5 lakh crore, through the PM MUDRA Yojana. She highlighted that within the past decade, 30 crore of these loans have been specifically allocated to women. Sitharaman emphasized the significance of this approach, describing it as a comprehensive step towards achieving social justice. She asserted that this inclusive strategy reflects secularism in action, portraying a commitment to serving all eligible individuals equitably.

Micro, small and medium enterprises (MSMEs) are the backbone of the Indian economy. India has 63.4 million MSME units spread across the vast expanse of our country. However, this sector has always been kept outside the gambit of organised business. This has resulted in the deprivation of the MSME sector in getting formal banking support. With this thought in mind, the PMMY scheme was introduced on April 8, 2015, with the objective of financial inclusion for MSMEs.

Objectives of PM Mudra Yojana:

Since MSME units existed outside the formal banking system, they were deprived of the benefits available for units that existed within the organised financial system of the country. Thus, the Pradhan Mantri Mudra Yojana was introduced by the Honourable Prime Minister on April 8, 2015, to bring the thriving MSME sector under the umbrella of banking.

The slogan of the program was ‘fund the unfunded’. The Pradhan Mantri Mudra Yojana (PMMY) scheme enables the extension of loans under affordable terms to this sector from public sector banks, regional rural banks, non-banking financial companies (NBFCs), microfinance institutions and foreign banks.

The PM MUDRA Scheme Outline:

The 3 categories of loans available under the PMMY scheme are:

Scheme Name	Permissible Loan Amount (INR)
Shishu	Up to INR 50,000
Kishore	INR 50,000 to INR 5 lakhs
Tarun	INR 5 lakhs to INR 10 lakhs

The 3 options mentioned above are meant for different levels of fund requirements. Also, as and when your requirement for additional funds grows, you may apply for the next higher slab.

Benefits Of The PM MUDRA Scheme

In our nation, there are so many remote places where the poor are unable to access normal banks. The MUDRA scheme’s main objective is to take financial aid to such remote places and serve those people who are in great need of a banking service. This scheme will provide all banking services such as savings accounts, loans, credit cards and some other special benefits to deserving beneficiaries. The authorized capital of PM MUDRA at present is Rs.1000 crore and the paid-up capital is Rs.750 crore, fully subscribed by SIDBI. More capital is expected to enhance the functioning of MUDRA.

Microfinance is an economic development tool that seeks to provide people at the bottom of the pyramid with income-generating opportunities. This covers a range of programs that include many other credit-plus services, financial literacy, and other social support services in addition to providing credit.

SIDBI would be responsible for developing and refinancing all sectors of micro-enterprises by supporting financial institutions engaged in lending to micro/small businesses engaged in manufacturing, trading and service activities. PM MUDRA will partner with banks, MFIs and other government/regional lending institutions to provide microfinance funding to the country’s micro-enterprise sector.

Pradhan Mantri Mudra Yojana Eligibility Criteria

• The applicant has to be an Indian citizen and an entrepreneur who may be a proprietor or has a small partnership firm.
• The minimum age of the applicant has to be 18 years and the maximum age limit is 65 years.
• The requirement of loans must be for non-farm-related business activities.
• The preferred segments of business are trading, manufacturing and services.
• The maximum permissible loan under the PMMY scheme is INR 10 lakhs, so the requirement needs to be less than or equal to INR 10 lakhs.

How To Apply For the PM MUDRA Scheme?

The MUDRA scheme offers a very simple way of applying to the finance scheme. To make it easier, the scheme is streamlined into 3 categories: 

• Shishu: Start-ups seeking a loan up to an amount of Rs. 50,000 can apply for a loan under this classification. The rate of interest would be 10–12%.
• Kishor: Unestablished business units seeking a loan amount of Rs. 50,000 up to Rs.5 lakhs can apply for a loan in this category and will have to bear an interest rate of 14–17%.
• Tarun: Established businesses looking for expansion of their existing unit can apply for a loan under this category with funding of up to INR 10lacs. The interest rate ranges above 16%.

Advantages Of The PM MUDRA Loan Scheme

The PM 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-enterprises.
• You can use this loan to fund, develop and expand your company with up to Rs.10 lakh funding.
• The PM MUDRA Yojana scheme is available for small businesses in both urban and rural areas.
• Women borrowers can get better benefits due to lower 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.
• Helps you to meet the working 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.

Document Checklist to avail of Mudra Yojana Benefits:

If you are keen to avail of Mudra Loan Scheme benefits, you need to furnish the following documents to the lending institution:

• Identity proof: Self-attested copy of Voter’s ID, Aadhaar Card, Passport, etc.
• Address proof: Same as the documents mentioned above along with a copy of the electricity bill.
• 2 copies of passport-sized photographs.
• Proforma invoice of the materials that are to be purchased with the loan.
• Proof of categories (e.g. SC, ST, OBC), if applicable.
• Proof of identity of the business enterprise: Copy of Trade Licence, Registration Certificate etc.

Sectors that are covered under the PM MUDRA Yojana scheme

• Transport: for purchase of vehicles such as rickshaws, 3-wheelers, small goods vehicles, taxis, etc.
• Personal services like men’s saloons, beauty parlours, gymnasiums, boutiques, dry cleaning, medicine shops, tailoring shops, etc.
• Food products production and packing facilities like papad making, jam making, sweet shops, ice cream making, canteen services, etc.
• Agriculture and allied services like pisciculture, poultry, livestock, Agro-processing, beekeeping, rearing, etc.
• Textile: Handloom, khadi activity traditional embroidery, vehicle accessories, etc.
• Business: Traders, shopkeepers, service enterprises, non-farm income activities, etc.

Important credit schemes under the PM MUDRA Yojana

• The PM 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 lakh if they have provided micro-enterprises credit based on requirements.
• Mudra Card overdraft: This card allows 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.

Pradhan Mantri Mudra Yojana stands as a testament to the government’s commitment to fostering entrepreneurship and economic growth. By providing financial assistance to micro-enterprises and MSMEs, PMMY plays a pivotal role in driving inclusive development and empowering aspiring entrepreneurs across the country.