Updated on: Feb 1st, 2024
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5 min read
There are many loans and schemes offered by the government, banks, NBFCs, and other lending agencies. Each of these schemes and loans targets small and medium-sized businesses from different sectors with different capacities. Out of them all, the Pradhan Mantri MUDRA Yojana, also known as the MUDRA Loan, is the most popular.
Latest Update:
Interim Budget 2024-25: PM Mudra Yojana has sanctioned 43 crore loans aggregating to Rs.22.5 lakh crore for the entrepreneurial aspirations of the country's youth, and 30 crore loans have been given to women entrepreneurs.
MUDRA stands for Micro Units Development and Refinance Agency Limited. This is a non-banking finance company (NBFC) that supports the development of micro and small enterprises in the country. MUDRA provides support in terms of refinancing to banks, NBFCs, and microfinance institutions (MFIs) so that they can, in turn, support micro and small enterprises under the Pradhan Mantri MUDRA Yojana.
Pradhan Mantri MUDRA Yojana (PMMY) is a scheme introduced by the Prime Minister of India on 8 April 2015. The programme focuses on providing loans to non-farm and non-corporate micro/small businesses. The scheme offers loans of up to Rs.10 lakh. The loan programme aims to promote entrepreneurship among the youth.
The programme is segregated into three different schemes:
The different schemes listed above signify the stages of growth and the funding needs of enterprises. They also act as the reference point to identify the next phase of growth. The government provides more focus on the Shishu scheme, then the Kishor and Tarun schemes. The programmes also offer equal importance to the sector of the enterprise and the business activities practised.
Interested borrowers can avail MUDRA loans from a nearby bank branch, NBFC, or MFI. You can also apply for MUDRA loans online on the Udyamimitra portal, i.e. www.udyamimitra.in. You need to take care not to fall for false traps as the facility does not include any agents or intermediaries.
MUDRA loans aim to generate income and offer employment opportunities to the needy. Besides, the loans are provided for the following purposes:
Here are a few more examples of activities that one can do with the financed funds, segregated based on the sectors:
A MUDRA card is, basically, a debit card that is issued to beneficiaries of MUDRA loans. A card is issued against every MUDRA loan account for accessing the loan amount. Multiple withdrawals and credits can be made with the card to manage the working capital limit so that the interest can be maintained at a minimum.
From another perspective, the card helps digitise the transactions and keep track of the credit history for the borrower. The MUDRA card remains valid across the country, i.e. a borrower can withdraw cash from the MUDRA card at any ATM/micro ATM and make payments at any point-of-sale machines.
Among the numerous initiatives taken by the Government of India towards encouraging enterprise creation in the country, the ‘Make in India’ programme is a noteworthy one. This programme was designed to facilitate investment, boost innovation, support skill development, and build state-of-the-art manufacturing amenities. The plan was followed by Start-Up India and Stand Up India campaigns. MUDRA loans scheme complements the Make in India initiative in supporting the development of micro-businesses in India.
There are many challenges that non-corporate small businesses face apart from credit constraints. A few such problems are:
MUDRA is planning to take up an initiative to offer developmental and support services to the target audience in future. MUDRA looks forward to becoming a market maker and builds a society with capacities to deliver efficient and sustainable results.
MUDRA Loan under PMMY targets small enterprises and has different schemes based on loan amount. MUDRA aims to provide funding for various sectors and activities. MUDRA card helps manage loan amount. It connects with the Make in India campaign to support micro businesses. Future plans include offering developmental support services for small businesses.