Mudra Yojana: The central government led by Prime Minister Narendra Modi launched the Pradhan Mantri Mudra Yojana (PMMY) in the year 2015. The main objective of this scheme is to provide easy and collateral-free micro-credit of up to ₹ 20 to non-corporate, non-agricultural small and micro-entrepreneurs to start their business. Let us tell you that in October last year, the government had directly increased the loan limit from ₹ 10 lakh to ₹ 20 lakh. The government had made this big increase in the loan limit to further the objectives of the Mudra scheme so that more and more people could take advantage of this scheme.

Loans are available in 4 categories Mudra Yojana

Under Pradhan Mantri Mudra Yojana, banks provide loans in 4 different categories, which are designed according to the need and size of the business:

Shishu

In this category, loans up to ₹50,000 are given. This is for those who are just starting their business or work on a very small scale, such as small shopkeepers, hawkers, or individual service providers.

PMMY e-Mudra loan
PMMY e-Mudra loan

Kishor

In the Kishore category, loans ranging from ₹50,000 to ₹5,00,000 are given. This is for those businesses that are already established but need more capital for expansion or investment in new machinery.

Tarun

The Tarun category offers loans ranging from ₹5 lakh to ₹10 lakh. This is for large-scale micro-businesses that need substantial working capital or purchase large equipment.

Tarun Plus

This new category offers loans ranging from ₹10 lakh to ₹20 lakh. Here you have to keep in mind that loans under Tarun Plus are given only to those entrepreneurs who had previously taken a loan under the Tarun category and repaid it on time. This is for those businesses that have grown successfully and are now planning a major expansion.

Loan repayment period and interest rates

According to information received from the website of the State Bank of India, the loan repayment period and interest rates under Pradhan Mantri Mudra Yojana (PMMY) are as follows:

Loans up to ₹5 lakh

Loans up to this amount have a time limit of 5 years to repay, which includes a moratorium period of a maximum of 6 months. The moratorium period is the time when you do not have to start repaying the loan.

Loans from ₹5 lakh to ₹20 lakh

Loans of this large amount have a time limit of 7 years to repay, which includes a moratorium period of a maximum of 12 months.

According to SBI, the EBLR for loans given under the Mudra scheme is 10 years. (EBLR – External Benchmark Lending Rate) along with an additional interest of 3.25 percent has to be paid. EBLR is the external benchmark rate set by the Reserve Bank of India (RBI).

For more information related to Mudra Yojana, you can contact your nearest bank branch. They can help you with detailed information and the application process.