Pradhan Mantri Mudra Yojana (PMMY)

Pradhan Mantri Mudra Yojana (PMMY) or PM Mudra Loan Yojana is a scheme initiated by the Government of India to provide financial support up to a maximum of Rs. 10 Lakh for individuals, micro, small and medium companies, and small / micro / non-agricultural companies.

Mudra loans are provided under PMMY with the help of public and private sector banks, non-bank finance companies (NBFCs), microfinance institutions (MFIs) and regional rural banks (RRB).

Characteristics of Pradhan Mantri Mudra Yogana (PMMY)

• The loans offered are in 3 categories: Shishu, Kishore and Tarun
• Maximum Loan Amount: Rs. 10 lakh

Minimum loan amount: there are no criteria

Warranty / Safety: Not required

• Age criteria: 18 years minimum and 65 years maximum

Repayment period: up to 5 years

• Interest rate: varies from one bank to another.

Types of schemes under the shade of Pradhan Mantri Mudra Yojana

Loan Amount Advance: The PM Mudra Loan Program consists of three categories under which loans are disbursed:

Shishu: for loans amounting to Rs. 50,000

Kishore - to take out a loan of Rs. 50,001- Rs 5 lakh

• Tarun: For a loan in excess of 5 lakhs and amounting to 10,000 rupees

Who Can Borrow: Any entrepreneur or company that has not defaulted on a loan by is eligible to apply for a loan under PMMY (Pradhan Mantri MUDRA Yojana). Therefore, sole proprietorship, limited partnerships, public sector companies, owned companies, or any other legal business entity can apply for a Mudra loan.

Purpose of Loan Assistance: Since a MUDRA loan is a commercial loan, the loan amount cannot be used for personal needs. They are provided to small businesses that carry out specific activities in the manufacturing, service, or trade sectors. Firms can use the capital obtained from the MUDRA loan for marketing purposes, increasing available working capital, or obtaining capital assets to grow the business.

Interest rates: Loans are offered under the MUDRA scheme at nominal interest rates that vary from bank to bank and are based on the approved loan amount.

Pradhan Mantre Mudra Yogana (PMMY) Deals

Pradhan Mantri Yojana loan has a bunch of offers. The significant few include:

1. Microcredit Scheme: Under this scheme, financial support is distributed through microfinance institutions (MFIs) so that they can grant commercial loans amounting to Rs. 1 lakh. Typically, the method of providing such loans could include individuals involved in specific small enterprise activities, as well as various joint responsibility groups (JLGs) and self-help groups (SHGs).
2. The Women Entrepreneur Program (Mahila Uddyami Yojana): This plan is an important part of MUDRA Yojana which is specifically targeted at women entrepreneurs. It is designed to encourage women entrepreneurs, women's corporate responsibility groups, and self-help groups to create numerous small businesses. In such cases, special concessions can be granted, for example, reducing the interest rate by up to 0.25% on the loans granted.
3. Bank Refinancing Scheme: MUDRA allows banks, including registered cooperative banks, regional rural banks and commercial banks, to easily refinance loan amounts (up to 10,000 rupees per unit). Refinancing service is only available if these small business business loans are offered. Banks eligible to benefit from the refinancing service must meet the requirements notified from time to time.
4. The MUDRA Card - The MUDRA Card is an innovative credit product that facilitates access to credit for small businesses while providing flexibility to the card owner. It can be used as a credit card with an overdraft limit (loan) and also as a debit card with the ability to make withdrawals from ATMs. Businesses can use the Mudra Card to increase working capital under their exclusive cash credit agreement.

Credit Guarantee Fund - Also known as Portfolio Credit Guarantee, it involves the creation and use of a special fund called the Small Unit Credit Guarantee Fund (CGFMU). This fund is managed by the National Credit Guarantee Trustee Company Ltd. It allows eligible entities to receive small loans easily.

Equipment Financing Scheme: As part of the Ministry of Rural Development and Development loan scheme, this scheme enables owners of small enterprises and small units to obtain a loan to finance the purchase / upgrade of eligible equipment / machinery. This encourages companies to improve their production technologies to increase the overall productivity and efficiency of their business.

Small Enterprise Credit - One of the primary motives of the Ministry of Rural Development and Rural Development is to maximize both the amount of benefits and the number of beneficiaries of the system. A large proportion of the Indian population currently works in specific sectors including, but not limited to, road transport, food production, textile production, and community services. To meet the growth needs of these sectors, a number of products and schemes have been launched specifically designed to help small businesses succeed and thrive.

What do banks earn?

It is clear that the MUDRA Yojana loan can benefit small industries operating in India and act as an engine for the country's development. But this scheme helps the banks, that is, the lender too. Any collateral used to deliver PM Mudra Yojana will be kept by the Lender to reduce your risk. Additionally, any assets created through the loan will be mortgaged to the lender. The following are bank allocations:

• Providing a Small and Micro Business Trust Guarantee Fund (CGTMSE) that protects the bank if the borrower fails to meet its obligations as a result of incurring a business loss.
• The bank can also request a DPN (Demand Note), which is a written undertaking by the borrower to repay the loan amount at an agreed upon interest rate.

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