In Pradhan Mantri Mudra Yojana(PMMY), Mudra stands for Micro Units Development & Refinance Agency Ltd. is a financial institution established in April 2015 launched by the Honorable Prime Minister while presenting the Union Budget for Financial Year 2016.
Mudra aims to provide financial support to the micro enterprise sector like Public Sector Banks, Private Sector Banks, Regional Rural Banks, State Cooperative Banks, Urban Cooperative Banks, and Foreign Banks or Non Banking Financial Company (NBFC) / Micro Finance Institutions (MFIs). Along with Mudra, PMMY was also launched.
The Mission of Mudra scheme is
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Key Features of Pradhan Mantri Mudra Yojana (PMMY)
Micro Credit Scheme
Under this scheme, financial support is provided to the Micro Financial Institutions (MFIs), so that they can extend their lending to individuals or a group or anyone willing to run their enterprise.
Mahila Uddyami Scheme
This scheme is designed especially for the women, group of women, Joint Liability Groups and Self Help Groups of Women who are willing to set up micro enterprises (small scale business). Special interest concessions are also offered in this scheme.
Refinance Scheme for Banks
Mudra loans refinance (provide new loans at a lower rate of interest) up to Rs 10 Lakhs to banks to extend to the borrowers but the only condition under this scheme is that banks can extend these loans only to those who are engaged in micro or small enterprises of manufacturing and service sector.
Mudra Card
Mudra Card is a unique product which makes credit easily accessible while providing flexibility to the card owner. Mudra Card can also be used as a credit card for the overdraft limit and it can also be used as a debit card with the facility of ATM withdrawals.

Credit Guarantee Fund
In Credit Guarantee Fund, it would provide more than 1, 00,000 Crores to the finance institutions in order to reduce the credit risk.
Equipment Finance Scheme
This scheme encourages people to expand on technological front and to speed up the production of products and services.
Credit to Micro Enterprises
This scheme is striving to meet the requirements of land transport, food production, textile production and community services to maximize both the number of benefits and number of beneficiaries from the scheme.
Benefits of Pradhan Mantri Mudra Yojana (PMMY)
- Under this yojana, all the unfunded individuals or small enterprises gets financial support.
- This scheme also wraps the remote areas into systematic banking. And people in need can avail loans in nominal interest rates.
- Small enterprises can get maximum benefit as it offers a credit agent scheme for a good start. Also, the scheme offers maximum benefits at minimum risk for all micro businesses.
- Mudra Yojana provides credit guarantee i.e. in case the borrower goes into debts the government bears the loan’s responsibility.
Loans under PMMY
Under PMMY Scheme, everyone from non – farm income generating sector could seek loans up to Rs. 10 Lakhs.
The main purpose behind Mudra Loan Scheme is to engage unbanked business people and own account enterprises into the formal banking system. These Non – Corporate Small Business Sector or NCSBS are street vendors, repair shop owners, small scale industry men, and artisans.
Loan Amount and Interest Rates Offered Under Mudra Scheme
Shishu Loan | Kishore Loan | Tarun Loan | |
Loans | up to Rs- 50,000 | Between Rs 50,001- Rs 5 lakhs | more than 5 lakhs and up to Rs 10 lakhs |
Interest Rates | 10% to 12% | 14% to 17% | 16% |
One essential part of Mudra Loan is that it offers loan through Mudra Card (Rupay Card: India’s own domestic card). And the card will be provided by the bank that sanctioned the loan.
Anyone or any private limited companies, public sector companies, proprietary firms can avail the Mudra Loan. The only condition is that the individual or enterprise should not be a defaulter of on any loan repayment.
Mudra Bank offers loan with nominal interest rates that too vary from bank to bank. All the loans offered by Mudra Bank are strictly monitored by Mudra Limited. The maximum tenure period of the loan is 36 months and needs to be repaid within the tenure period.
Documents Required for Applying for PMMY
- Proof of Identity – Self attested copy of Voter’s ID Card / Driving Licence / PAN Card / Aadhaar Card / Passport / Photo Ids issued by Govt. authority etc.
- Proof of Residence – Recent telephone bill / electricity bill / property tax receipt (not older than 2 months) / Voter’s ID Card / Aadhaar Card / Passport of Individual / Proprietor / Partners Bank passbook or latest account statement duly attested by Bank Officials / Domicile Certificate / Certificate issued by Govt. Authority / Local Panchayat / Municipality etc.
- Applicant’s recent Photograph (2 copies) not older than 6 months.
- Quotation of Machinery / other items to be purchased.
- Name of Supplier / details of machinery / price of machinery and / or items to be purchased.
- Proof of Identity / Address of the Business Enterprise – Copies of relevant Licences / Registration Certificates / Other Documents pertaining to the ownership, identity of address of business unit, if any
- Proof of category like SC / ST / OBC / Minority etc
For all PMMY loans, the following are to be noted.
- No processing fee
- No collateral
- Repayment period of loan is extended up to 5 years
- Applicant should not be defaulter of any Bank / Financial Institution
Bank’s Performance under the (PMMY) in 2015-16
Name of the Bank | No. of Accounts | Amount disbursed (In Crores) |
State Bank of India and Associates | 1,300,589 | Rs.16,999.82 |
ICICI Bank | 150,876 | Rs.3,921.51 |
Bank of Baroda | 224,367 | Rs.1,772.91 |
Punjab National Bank | 596,839 | Rs.3,593.42 |
HDFC Bank | 1,251,106 | Rs.5,356.89 |
Canara Bank | 790,354 | Rs.7,506.64 |
Axis Bank | 460,917 | Rs.2,229.17 |
UCO Bank | 562,668 | Rs.2,199.4 |
Bank of India | 376,486 | Rs.2,752.28 |
Union Bank of India | 204,729 | Rs.1,841.06 |