top of page

How to get Pradhan Mantri MUDRA Loan

Updated: Feb 27, 2020

One of the biggest bottleneck for SMEs in India is the lack of financial support from the formal banking or financial sector which hampers growth of small businesses. To remove this bottle neck and provide finance to micro units or Entrepreneurs, MUDRA Bank has been setup as a subsidiary of SIDBI.

MUDRA (Micro Units Development & Refinance Agency Limited) is an institution setup by the Government of India for development and refinancing activities relating to micro units. Under MUDRA, loans are provided under three schemes namely ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth and funding needs of the beneficiary micro unit. This loan can be availed by Micro Units and Entrepreneurs in India. In this article, we look at the procedure for obtaining MUDRA loan. MUDRA would be responsible for refinancing all financial institutions engaged in financing of Small Businesses, Societies, Trusts Section 8 Companies, Co-operative Societies, Small Banks, Scheduled Commercial Banks and Rural Banks which are in the business of lending to micro or small businesses engaged in manufacturing, trading and services activities.

Loan is provided currently under three schemes in Pradhan Mantri MUDRA Yojana. The three schemes are as following:

  • Shishu: Loan of upto Rs.50,000/-

  • Kishor: Loans of above Rs.50,000 to Rs.5 lakhs

  • Tarun: Loans of above Rs.5 lakhs to Rs.10 lakhs

Loan Eligibility

Any Indian Citizen who has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading or service sector and whose credit need is less than 10 lakh can approach either a Bank, MFI, or NBFC for availing of MUDRA loans under Pradhan Mantri Mudra Yojana (PMMY). The terms and conditions of the lendor would have to be followed for availing of loans under MUDRA. The lending rates are as per the RBI guidelines issued in this regard from time to time. Since, MUDRA is a refinancing institution, loans are not offered directly by MUDRA but through existing NBFCs, Financial Institutions, Banks, Primary Lending Institutions, etc.


MUDRA loan is provided in the form of a MUDRA card wherein the borrower can avail credit in a hassle free and flexible manner through a RuPay card. The MUDRA card will provide working capital arrangement in the form of Cash Credit or Over Draft and can be used by drawing cash from ATM or making purchases using Point of Sale credit card swiping machines. MUDRA card also allows for repayment of the amount as and when surplus is available, thereby reducing interest burden.


To obtain MUDRA loan the borrower can approach the branch of a bank or financial institution providing MUDRA loan with the following information and documents:

  • MUDRA Loan Application

  • Business plan

  • Proof of Identity like PAN / Drivers License / Aadhaar Card / Passport

  • Residence proof like recent telephone bill / electricity bill or property tax receipt

  • Applicant’s recent photograph not more than 6 months old

  • Quotation of machinery or other items to be purchased

  • Name of supplier or details of machinery or prices of machinery

  • Proof of identity / address of the business like tax registration, business license

  • Proof of category like SC/ST/OBC/Minority, if applicable

It is important to note that there is no processing fee or collateral requirement for obtaining MUDRA loan.

Top Public and Private sector banks providing MUDRA Loans:

  1. HDFC Bank – 5,57,41,

  2. IndusInd Bank – 4,95,954

  3. UCO Bank – 4,79,476

  4. State Bank of India – 4,67,062

  5. Axis Bank – 4,36,323

  6. Canara Bank – 3,35,270

  7. Bank of India – 2,73,784

  8. Syndicate Bank – 2,14,228

  9. Indian Bank – 1,90,129

  10. Punjab National Bank – 1,83,594


bottom of page