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The MUDRA (Micro Units Development and Refinance Agency) scheme was launched by the Government of India in April 2015 under the Pradhan Mantri MUDRA Yojana (PMMY) to provide affordable institutional credit to the unfunded micro and small enterprise sector. Since its launch, over 40 crore loans worth Rs 23 lakh crore have been disbursed under this scheme.
| Category | Loan Amount | For |
|---|---|---|
| Shishu | Up to Rs 50,000 | Early-stage businesses, startup of business |
| Kishore | Rs 50,001 to Rs 5 Lakh | Established businesses needing expansion capital |
| Tarun | Rs 5 Lakh to Rs 10 Lakh | Well-established businesses, larger working capital |
Who Is Eligible for a MUDRA Loan?
- Non-farm micro and small enterprises in manufacturing, trading, and service sector
- Individuals, proprietary concerns, partnership firms, and private limited companies
- Business activities: food processing, handicrafts, textile weaving, repair shops, transport vehicles, beauty salons, food stalls, hawkers and similar micro enterprises
- NOT eligible: Agricultural crop loans, farm equipment purely for agriculture, pure real estate businesses
Key Features of MUDRA Loans
- No collateral required - MUDRA loans are collateral-free
- No processing fee - Government has waived processing charges on Shishu loans
- Competitive interest rates - Typically 8% to 12% per annum depending on lender and category
- Repayment period - Up to 5 years for term loans
- Women borrowers - Often get preferential interest rates of 0.25% to 0.50% lower at many banks
Documents Required
| Category | Documents |
|---|---|
| Identity | Aadhaar Card, PAN Card, Voter ID or Passport |
| Business | Business registration proof (MSME or Udyam, Shop Act, Pvt Ltd CoI, Partnership Deed) |
| Financial | Last 2-3 years ITR (if available), 6 months bank statement |
| Business Plan | Brief project report or business plan for Kishore and Tarun loans |
Where to Apply for a MUDRA Loan
- Public Sector Banks: SBI, PNB, Canara Bank, Bank of Baroda, Union Bank
- Private Banks: HDFC, ICICI, Axis, Kotak (select schemes)
- Regional Rural Banks (RRBs) and Microfinance Institutions
- NBFCs: Bajaj Finance, Fullerton, Muthoot and others
- Online: Udyamimitra Portal (udyamimitra.in) - connects you directly with multiple lenders
- Low CIBIL score (below 650) - check and fix your credit score first
- No existing bank account or very low transaction history
- Incomplete documentation or no business registration proof
- Loan for agricultural crop activities (not eligible under MUDRA)
MUDRA loans are one of the most accessible sources of startup and expansion financing for micro-entrepreneurs in India. The absence of collateral requirement makes it especially attractive for first-generation entrepreneurs. Legal Chanakya assists with MUDRA loan documentation, project report preparation, and application facilitation.
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