Mudra Loan Subsidy: What Borrowers Need To Know

The Pradhan Mantri Mudra Yojana (PMMY) or Mudra loan scheme was launched in 2015 to provide loans of up to Rs 10 lakh to small and micro non-farm, non-corporate enterprises. The scheme aims to provide financial support to small businesses and entrepreneurs by offering loans at low interest rates and Mudra cards with a pre-decided credit limit. While the scheme does not offer a subsidy, borrowers in the Mudra Shishu category are eligible for an interest subsidy of Rs.1,500 crore and a 2% discount on their interest rate for a year.

No subsidy for SC/ST/OBC category

The MUDRA (Micro Unit's Developments and Refinances Agency) loan scheme was launched under the Pradhan Mantri MUDRA Yojana (PMMY) to offer financial support to non-corporate, non-farm small, and micro-enterprises. The scheme offers loans under three categories: Shishu, Kishor, and Tarun. Shishu offers loans up to Rs. 50,000, Kishor offers loans from Rs. 50,001 to Rs. 5,00,000, and Tarun offers loans from Rs. 5,00,001 to Rs. 10,00,000. The MUDRA loan scheme aims to support businesses at different stages, from initial startups to expansion.

While the MUDRA loan scheme provides valuable financial assistance, there is no subsidy offered for individuals belonging to the SC/ST/OBC category. This means that individuals from these categories will not receive any reduction or waiver on the loan amount or interest rate specifically because of their caste classification. However, it is important to note that there may be other benefits and relaxations offered to individuals from these categories when applying for MUDRA loans.

For instance, individuals from the SC/ST/OBC category may be required to provide specific documentation, such as a certificate of proof regarding their caste classification, which can help facilitate their loan application process. Additionally, the National Scheduled Tribe and Scheduled Caste Hub (NSTSH) has been launched to promote entrepreneurship and economic empowerment for SC/ST groups. This hub has supported various initiatives and provided subsidies and support to SC/ST entrepreneurs, such as reimbursement subsidies and participation in business programs, which have contributed to the growth of their businesses.

While there may not be a direct subsidy for MUDRA loans under the PMMY for the SC/ST/OBC category, individuals from these categories can explore alternative initiatives and hubs that provide support and subsidies for entrepreneurship and business development. These initiatives aim to empower individuals from these categories and create a more inclusive and supportive business ecosystem.

Mudra Shishu eligible for benefits under Atmanirbhar Abhiyan

The Pradhan Mantri Mudra Yojana (PMMY) was launched in 2015 to provide loans to non-corporate, non-farm small, and micro-enterprises. The scheme offers loans at low-interest rates and Mudra cards with a pre-decided credit limit. The MUDRA (Micro Units Development and Refinance Agency) has introduced three different loan products: Shishu, Kishor, and Tarun. These categories represent the stage of growth, funding requirements, and benchmarks for expansion.

The Shishu category offers loans of up to Rs. 50,000. Under the Atmanirbhar Abhiyan, the Indian government has announced that the Mudra Shishu category is eligible for certain benefits. These include:

• Relief of up to Rs.1,500 crore for borrowers.
• An interest subsidy of Rs.1,500 crore.
• A 2% discount on the interest rate for fast recipients for one year.

The Mudra Shishu category, therefore, provides eligible borrowers with access to financial support and benefits under the Atmanirbhar Abhiyan initiative.

Pradhan Mantri Mudra Yojana (PMMY)

The loans under the PMMY can be availed through eligible Member Lending Institutions (MLIs), which include private and public sector banks, NBFCs, cooperative banks, and regional rural banks. Borrowers can also now file online applications for MUDRA loans on the Udyamimitra portal.

Mudra loans are offered to individuals, self-employed professionals, business owners, entrepreneurs, and MSMEs to meet their day-to-day business requirements and business expansion purposes. The scheme offers assistance to small-scale industries and entrepreneurs by offering loans at low interest rates and providing Mudra cards with a pre-decided credit limit. There is no subsidy offered under the Mudra Loan by any financial institution in India, and there has been no statement made by the Prime Minister or the Ministry of Finance on a subsidy being provided.

The three categories of loans under the PMMY are:

• Mudra Shishu: Up to Rs. 50,000
• Mudra Kishore: From Rs. 50,000 to Rs. 5,00,000
• Mudra Tarun: From Rs. 5,00,000 to Rs. 10,00,000

Mudra loan scheme

The Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme of the Government of India. The scheme offers financial assistance to micro and small enterprises in the non-farm sector, including manufacturing, trading, and service sectors. The PMMY scheme provides micro-credit/loans up to Rs. 10 lakhs to income-generating micro-enterprises. These include small manufacturing units, shopkeepers, fruit and vegetable vendors, truck operators, repair shops, small industries, and artisans, among others.

The MUDRA loan scheme was launched under the PMMY to offer financial support to non-corporate, non-farm small, and micro-enterprises. MUDRA loans are offered to individuals, self-employed professionals, business owners, entrepreneurs, and MSMEs to meet their day-to-day business requirements and expansion needs. The loan amount varies depending on the stage of growth and funding needs of the beneficiary, classified under three categories: 'Shishu' (up to Rs. 50,000), 'Kishore' (from Rs. 50,000 to Rs. 5 lakhs), and 'Tarun' (above Rs. 5 lakhs up to Rs. 10 lakhs).

MUDRA loans are offered at low interest rates, and borrowers can also obtain MUDRA cards with a pre-decided credit limit. These loans are provided by eligible member lending institutions (MLIs) such as banks, NBFCs, MFIs, and other financial intermediaries approved by MUDRA Ltd. It is important to note that MUDRA does not engage any agents or middlemen, and borrowers should be cautious of individuals posing as facilitators.

While the PMMY scheme offers loans at low interest rates, there is no official statement or indication of a subsidy provided on MUDRA loans. This includes loans for individuals falling under the SC/ST/OBC category. The absence of a subsidy highlights the need for alternative funding sources for micro-enterprises struggling to find financial support for their businesses.

Interest subsidies for education loans

The Pradhan Mantri Mudra Yojana (PMMY) is a scheme by the Government of India to facilitate micro-credit/loans of up to Rs. 10 lakhs for small and medium businesses. The scheme is targeted at non-corporate, non-farm small and micro-enterprises in the manufacturing, trading, or service sectors. These include activities allied to agriculture, such as poultry, dairy, and beekeeping.

The scheme is implemented by Micro Units Development and Refinance Agency Ltd. (MUDRA), an NBFC supporting the development of the micro-enterprise sector in the country. MUDRA provides refinance support to banks/NBFCs/MFIs for lending to micro-units with loan requirements of up to Rs. 10 lakhs. The scheme has been classified into three categories: 'Shishu', 'Kishore', and 'Tarun', to signify the stage of growth, development, and funding needs of the beneficiary micro unit/entrepreneur.

MUDRA loans are collateral-free and do not require borrowers to pledge assets to secure the loan. While there are no explicit subsidies offered under the PMMY scheme, MUDRA loans are provided at lower interest rates than the market rate. MUDRA also offers a 25-basis point interest reduction for women entrepreneurs availing of loans from MFIs/NBFCs. Additionally, the MUDRA card helps borrowers manage their working capital limit efficiently and keep interest burdens at a minimum.

To avail of a MUDRA loan, applicants can approach eligible private and public sector banks, NBFCs, cooperative banks, or regional rural banks. The eligibility criteria include a satisfactory credit history and the necessary skills, experience, and knowledge to undertake the proposed activity. The requirement for educational qualifications is assessed based on the nature and requirements of the proposed business activity.

Frequently asked questions