PM Mudra Yojana

Pradhan Mantri Mudra Yojana (PMMY) is a government scheme launched in April 2015 to provide affordable credit to micro and small enterprises that do not have access to formal bank financing. Under the scheme, collateral-free loans are provided through banks, NBFCs, and microfinance institutions to non-corporate, non-farm small business owners.

What Is PM Mudra Yojana?

MUDRA stands for Micro Units Development and Refinance Agency. The MUDRA Bank was set up to refinance and regulate lenders who provide credit to micro-enterprises. Under PMMY, eligible businesses can get loans of up to Rs 20 lakh (expanded from the original Rs 10 lakh limit) for income-generating activities.

Loan Categories

PMMY offers loans in three categories based on business stage and funding requirement:

| Category | Loan Amount | Target Segment |
|———-|————|—————-|
| Shishu | Up to Rs 50,000 | Just starting or very small business |
| Kishor | Rs 50,001 to Rs 5 lakh | Established but needs growth capital |
| Tarun | Rs 5 lakh to Rs 20 lakh | Larger micro/small business expansion |

A new category, Tarun Plus, was introduced in 2024 for loan amounts between Rs 10 lakh and Rs 20 lakh.

Key Features

– **Collateral-free**: no security or guarantor required for loans up to Rs 10 lakh
– **No application fee**: banks and NBFCs cannot charge upfront fees
– **Flexible use**: for business purposes such as equipment purchase, working capital, transport vehicles, and business expansion
– **Wide reach**: loans are available through commercial banks, regional rural banks, NBFCs, MFIs, and co-operative banks

Who Can Apply?

– Non-farm small and micro enterprises
– Artisans, traders, vendors, shopkeepers, and small manufacturers
– Any Indian citizen with a viable business plan
– Self-employed individuals in sectors like beauty, repair services, food processing, textiles, and retail

Practical Example

Sunita runs a home-based pickle and papad business. She applies for a PMMY Kishor loan of Rs 2 lakh at her local bank. The bank approves the loan without any collateral. She buys an industrial grinder and packaging equipment, scaling her production. Within 18 months, her monthly revenue triples and she repays the loan in full.

Key Takeaways

– PMMY provides collateral-free loans to micro and small businesses in three categories: Shishu, Kishor, and Tarun
– Loans up to Rs 10 lakh require no collateral; loans up to Rs 20 lakh available under the expanded scheme
– Available through banks, NBFCs, MFIs, and regional rural banks
– No upfront fees can be charged for MUDRA loan applications
– Over 40 crore loans amounting to more than Rs 23 lakh crore have been sanctioned under PMMY since 2015