In today’s post, we are going to talk about mudra loan interest rates and how you can apply for a mudra loan.

You’ll also learn about the types of mudra loan that you can apply. 

Keep reading…

Pradhan Mantri Mudra( (Micro Units Development and Refinance Agency) Yojana started by the NDA government in the year 2015. The Programme focuses on extending financial help to the small business sector that is non-corporate and non-farm. These micro-units struggle hard for the financial support required to start and grow the business and are primarily not entertained by the bank for the institutional funds. Though these small businesses have immense potential towards contributing to the nation’s GDP, however, these micro-units are unorganised and unregulated in a significant part of semi-urban and rural areas.

What are the different stages of  Mudra Yojana Loan?

There are three stages of business loan where an entrepreneur can apply is Shishu, Kishor and Tarun

ShishuKishorTarun
Covering loans up to 50 thousandCovering loans up to 5 lacsCovering loans up to 10 lacs
  • This stage is for entrepreneurs who are about to start their business or need a lesser amount at the initial stage
  • Additional benefits announced by the Government of India under this stage
    • Rs 1500 crore relief to the borrowers
    • Interest discount of 2% for 12 months
  • This stage is for entrepreneurs who have started their business & need additional fund to sustain in the market
  • This stage also helps entrepreneurs who need more funds than the amount given in the Shishu stage to start the business
  • This stage is for entrepreneurs who want to grow their business or need to start a large undertaking that requires more fund

What is Mudra loan interest rate?

Mudra loan interest rate is ensconced on the guidelines of the scheme and RBI. The Central bank has fixed the interest rate to the base rate or MCLR (Marginal Cost of funds based lending rate) for the Commercial Banks to take a loan for the disbursal of Mudra loan to the Micro units. The lending rate prescribed to Regional Rural Banks and Scheduled Cooperative Banks up to 3.5% and not above Mudra refinance rate.

The interest rate for Mudra loan depends upon a few factors

  • The credit history of the individual
  • Profile of the customer
  • The business requirement of the customer
  • Guidelines laid down by the Scheme and RBI

The interest rates as per the segments are :

ShishuKishorTarun
The interest rates range from 1% to 12% The interest rates range from 8% to 12%The interest rates range from 11% to 20%

What is the Mudra loan interest of Top Banks?

Bank Interest chargedProcessing fee chargedRepayment periodThe maximum loan amount sanctioned
State Bank of India10.15% onwards
  • Nil for Shishu & Kishore
  • 0.5% of the loan amount(plus tax) 
Up to 5 yrsUp to 10 lacs
Bank of Baroda9.65% onwards + (Strategic Premium)
  • Nil
Up to 5 yrsUp to 10 lacs
Punjab National Bank8.65% onwards
  • As per customer profile
Up to 5 yrsUp to 10 lacs
Canara Bank9.85% onwards
  • Up to Rs. 5.00 Lakh – Nil
  • Above Rs. 5.00 Lakh – Rs. 500 onwards
Up to 7 yrsUp to 10 lacs
UCO Bank8.85% onwards
  • Nil
Up to 5 yrsUp to 10 lacs
Union Bank9% – 10.25% onwards
  • Nil
Up to 5 yrsUp to 10 lacs  
Bank of Maharashtra9.40% onwardsAs per customer profileUp to 5 yrsUp to 10 lacs

Note: The interest rate, the processing fee is subject change depending upon the mandate by RBI. This list excludes the GST and service charge that will be charged additionally

Who can apply for Mudra Loan?

The people or the type of business eligible for the Mudra loan is:

  • Non – farm small enterprise
  • Non – corporate small business
  • Shopkeeper, Foodservice unit, small manufacturing unit, Fruit and vegetable vendor and more such type of business

How to apply for Mudra Loan?

  • Contact nearest public or private sector bank to present the business plan for Mudra Yojana
  • Need to present the detailed description of the plan
  • Bank will ask to fill up the application form
  • The application will be quickly processed in case of the existing current account or the first time entrepreneur has to open a current account with the bank for getting a loan soon.

Apply for Quick Business Loan

What are the documents needed to apply for Mudra loan?

ShishuKishor/Tarun
  • Proof of identity, i.e. self-attested copy of Voter’s ID card / Driving License / Aadhaar Card / Passport /  PAN Card/ Photo Ids, issued by Govt. authority, etc. 
  • Proof of Residence i.e. recent Electricity bill /telephone bill / Receipt of Property tax, Voter’s ID / Aadhaar Card/Passport of beneficiaries,  Certificate issued by Govt. Authority / Municipality//Local Panchayat etc. 
  • Recent Photograph of Applicants (2 copies) not older than 6 months. 
  • Proof of SC/ST/OBC, if applicable. 
  • Proof of Business, i.e. Address of the business, if available.
  • Last 6 months account statement if any.
  • Quotation of Machinery to be purchased for business purpose
  • Proof of identity, i.e. self-attested copy of Voter’s ID card /PAN Card/ Aadhaar Card / Passport / Driving License, Photo Ids issued by Govt. authority etc. 
  • Proof of Residence i.e. recent telephone bill / Electricity bill / Property tax receipt / Aadhaar Card/ Voter’s ID card / / Passport of Individual / Proprietor / Partners, Certificate issued by Govt. Authority/Local Panchayat / Municipality etc. 
  • Proof of SC/ST/OBC, if applicable. 
  • Proof of Business, ie. Business address,  relevant Licenses copies/Registration certificates /lease or Rent agreement/other Documents w.r.t the ownership/Udyog Aadhaar Memorandum.  
  • Last 6 months account statement if any.
  • Unaudited balance sheets of the existing units in the last 2 yrs, along with income tax /sales tax returns etc. (Applicable for Rs. 2 lakhs loan & above).
  •  Projected Balance sheets of start-ups/business unit existing for one year, in case of working capital limits and for the term loan period (Applicable for loans of Rs. 2 lakh and above). 
  • Sales achieved for the existing units during the current financial year, up to the date of submission of application 
  • Proforma invoices/quotations for the assets to be purchased and estimates required for the civil works  
  • Asset & Liability statement of the borrower( Owners, directors & partners)
  • Memorandum and Article of association of the company/Partnership Deed of partners, etc., wherever applicable. 
  • Photos of applicant / Proprietor / Partners / Directors not older than 6 months (2 copies).

Note: The above list of necessary documents is only indicative. As per necessity on the merit of each case, additional records are obtained depending upon the local requirements.

What is Mudra credit card?

Mudra credit card is a type of credit card, which is issued to the borrower of Mudra loan during loan disbursal. The card can be used to purchase raw materials, machines, and other equipment from the registered vendor, used for working capital where the cash and credit are arranged to the borrowers.

The credit limit of the Mudra card is fixed at 20% of the loan amount, subject to a maximum of Rs 10,000. The first Mudra credit card was issued by Corporation bank on the RuPay platform.

As there are substantial crores of small business units in the country, generating employment opportunities for crores of people. Hence there is a clear indication that nurturing these small businesses will have a positive impact on the GDP of the country, so Mudra Yojana is a constructive step towards making India self-reliant.

I hope by now you doubt about mudra loan interest have been cleared. Let me know if you have questions regarding pradhan mantri loan yojana.