Right since the nationalisation of banks in 1969, every Indian Prime Minister has announced some bank loan scheme or the other in the name of Pradhan Mantri Business Loan. People also calling it Modi business loan.
This is one way of providing benefits to the poor. Continuing the trend, our present Prime Minister Shri Narendra Modi has announced the Pradhan Mantri Mudra Loan Yojana (PMMY) amidst great fanfare in 2015.
This is also known colloquially as Modi business loan. We shall look at the basic modalities of the Modi business loan scheme and see how it has changed the lives of thousands of young independent entrepreneurs.
The launch of Mudra Bank:
The Prime Minister Shri Narendra Modi launched the MUDRA Bank under the Pradhan Mantri Jan Dhan Yojana on 08th April 2015.
Starting with a financial strength of Rs 20,000 crores, the target of MUDRA Bank is to serve 5.77 crore small business entrepreneurs in the retail, manufacturing, and services sector.
also read: how to apply for mudra loan?
How do you apply for PM Modi business loan?
As of now, MUDRA Bank is not a full-fledged bank. It functions as a loan refinance agency. In fact, MUDRA stands for Micro-Units Development and Refinance Agency Ltd. Hence, you have to approach any of the following financial services organizations for applying for Modi business loan.
- Scheduled Commercial banks
- Regional Rural Banks
- Scheduled Urban Co-operative banks
- State co-operative banks
- Micro financial institutions
Different types of loans under the PMMY
The Modi business loan scheme offers loan under the following three categories.
- Shishu Scheme – Loans up to Rs 50,000 for start-up enterprises
- Kishor Scheme – Loans above Rs 50,000 and up to Rs 5,00,000
- Tarun Scheme – Loans above Rs 5,00,000 and up to a maximum of Rs 10,00,000
Eligibility criteria for people applying for the Modi business loan
The Modi business loan scheme lays down the following eligibility criteria.
- Applicant must be an Indian citizen only
- Individuals, Proprietors, Partnership firms, Pvt and Public limited companies, any other legally constituted entity
- Micro and small-scale business and not for personal or consumption needs
- Normal KYC norms as applicable to other accounts
- The maximum loan amount is Rs 10,00,00
Nature of assistance:
The Modi loan for business envisages granting of need-based term loans/overdrafts/composite loans for acquiring capital assets and working capital requirements.
The working capital limit in the Modi business loan scheme is released in the form of a MUDRA Card (a debit card issued on the RuPay Platform)
Margin / Promoters Contribution
Banks need not insist on any margin for loans under the Shishu category. The banks are free to stipulate adequate margin as per their lending policies for the other business loan by Modi.
Modi Business Loan Interest Rates:
The banks have been granted freedom to charge interest as per their norms, but they should ensure that the rate of interest for the ultimate borrowers should be reasonable.
Security:
There is no need to obtain any collateral for the Modi business loan.
- The first charge on assets created out of the Modi business loan
- CGTMSE guarantee cover as applicable
- MUDRA Bank Guarantee Cover when introduced
Inference:
The PMMY has been an unprecedented success with 40389854 Modi Business loans sanctioned up to 09.03.2018. The amount sanctioned under the Modi Business Loan is Rs 1, 98,711.79 crores.