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.<\/p>\n
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.<\/p>\n
PMMY offers loans in three categories based on business stage and funding requirement:<\/p>\n
| Category | Loan Amount | Target Segment |
\n|———-|————|—————-|
\n| Shishu | Up to Rs 50,000 | Just starting or very small business |
\n| Kishor | Rs 50,001 to Rs 5 lakh | Established but needs growth capital |
\n| Tarun | Rs 5 lakh to Rs 20 lakh | Larger micro\/small business expansion |<\/p>\n
A new category, Tarun Plus, was introduced in 2024 for loan amounts between Rs 10 lakh and Rs 20 lakh.<\/p>\n
– **Collateral-free**: no security or guarantor required for loans up to Rs 10 lakh
\n– **No application fee**: banks and NBFCs cannot charge upfront fees
\n– **Flexible use**: for business purposes such as equipment purchase, working capital, transport vehicles, and business expansion
\n– **Wide reach**: loans are available through commercial banks, regional rural banks, NBFCs, MFIs, and co-operative banks<\/p>\n
– Non-farm small and micro enterprises
\n– Artisans, traders, vendors, shopkeepers, and small manufacturers
\n– Any Indian citizen with a viable business plan
\n– Self-employed individuals in sector<\/a>s like beauty, repair services, food processing, textiles, and retail<\/p>\nPractical Example<\/h2>\n