The Pradhan Mantri Mudra Yojana, in short, the PMMY scheme, was launched about seven years ago by the respected Prime Minister of India, Mr Narendra Modi, on the 8th of April in the year 2015. It is a loan-providing scheme.
The loans under the Pradhan Mantri Mudra Yojana scheme are known as Mudra koans. A loan amount up to Rs 10 lakhs can be provided under this scheme to enterprises that are non-corporate and non-farming. Specifically, small enterprises, which can also be addressed as micro-enterprises, are the targets of this scheme.
Many startups in our country initially struggle to have a boost due to financial problems, which leads to their closure or failure, minimizing all the future possibilities of their growth or success.
Few brilliant ideas don’t even get an opportunity to take off due to their financial boundaries. The Pradhan Mantri Mudra Yojana scheme mainly aims to provide global standard services and financial support to the growing Businesses that belong to the “Bottom of the Pyramid” universe for their social and economic development.
The Pradhan Mantri Mudra Yojana scheme also promotes the entrepreneurship culture in India by providing a value-based, sustainable entrepreneurial culture and collaborating with partner institutions. The motive of the Pradhan Mantri Mudra Yojana scheme, if it turns out to be successful, is to directly or indirectly make a positive impact on our economy and provide financial security.
What is the scheme of the Pradhan Mantri Mudra Yojana?
● Under the Pradhan Mantri Mudra Yojana scheme, a non-corporate and non-farming enterprise can have a loan of up to Rs 10 lakh.
● This loan is provided to them by small finance banks, commercial banks, Regional Rural Banks(RRBs), Micro Finance Institutions(MFIs), and Non-Banking Financial Companies(NBFCs) as well.
● The borrowers must approach any of the banks mentioned above or institutions to get the required loan.
● This scheme also provides the facility to apply for a loan online by visiting the site.
● The PMMY, Mudra, has formed three categories according to the demands and needs of the entrepreneur or micro unit that also provide a point of reference for their growth towards the next phase, from the lower to the higher phase.
● The lowest category product under the aegis of PMMY, Mudra, is called “Shishu”, the latter or the more advanced product is called “Kishore”, and the last one is known as “Tarun”.
Who are eligible for Pradhan Mantri Mudra Yojana scheme?
The following applicants are qualified for the Pradhan Mantri Mudra Yojana: ● The small manufacturers of the country
● The artisans
● The fruits and vegetable dealers of the locality.
● The shopkeepers are from different places.
● The persons engaged in agriculture like livestock or poultry or pisciculture etc. The applicants or individuals must match with the Pradhan Mantri Mudra Yojana loan category to avail of the benefits. And depending on the eligibility, the individuals can get loans up to Rs. 10lakhs.
The individuals or the business people require various business statements and should report a projecting revenue as a part of the Pradhan Mantri Mudra Yojana scheme loan category.
The categories of the Pradhan Mantri Mudra Yojana scheme
The Pradhan Mantri Mudra Yojana scheme has three product categories. They are ● Shishu: This offers loans to individuals looking to start a business or are planning to start a business. The loan is up to Rs. 50,000
● Kishor: This offers loans to established businesses looking for additional financing extensions. The loan is up to Rs. 5 lakh.
● Tarun: This offers loans to well-established business people. The loan is up to Rs. 10 lakh.
What are the documents required for the Pradhan Mantri Mudra Yojana scheme?
There are three categories of documents required the d for the Pradhan Mantri Mudra Yojana scheme. They are:
1. For Vehicle loans:
● The Pradhan Mantri Mudra Yojana application form
● The vehicle loan application
● Two passport-size colour photographs of the applicant
● The photo ID proof
● The address or residential proof.
● The income statement is proof of the applicant.
● The bank statement of the bank for the last six months.
2. For Business Installment Loan:
● The Pradhan Mantri Mudra Yojana application form
● The Band Interleaved by Line(BIL) form.
● The photo identity proof of the applicant.
● The address proves where the Business will be set up.
● The establishment proof of the Business.
● The ownership proof of the Business or office.
● The proof of continuity of the Business.
● The proof of qualification of the applicant.
● The trade references
● The Business should be of CA-certified financials.
3. For the Business Loans Group & Rural Business Credit:
● The Pradhan Mantri Mudra Yojana application form.
● The Band Interleaved by Line(BIL) or the RBC form.
● The photo identity proof of the applicant.
● The age proof of the applicant.
● The address proves where the Business will be set up.
● The ownership proof of the Business or office.
● The Business vintage proof
● The bank statement for the last 12 months.
● The Income-tax office statement for the last two years.
How can you apply for the Pradhan Mantri Mudra Yojana scheme?
The applicant can apply for the Pradhan Mantri Mudra Yojana scheme in two ways.
1. Online:
● The applicant can avail of the Pradhan Mantri Mudra Yojana loans only from banks and other financial institutions authorized by PMMY. You can find the list of banks or other approved financial institutions by visiting the official website of the PMMY. You will have to download the relevant form from the options that look similar to the ones in the screenshot below.
● Once the applicant has filled up the Pradhan Mantri Mudra Yojana loan application form, the bank will proceed to send an SMS containing a loan offer confirmation code to your registered mobile number. The loan offer will include all terms and conditions of your desired Mudra loan. The applicant can then take up the Mudra loan pack in person at a branch or choose to move on with our online application system for a faster process.
● Once the applicant has completed all the required documents, submit them to the bank or lending institution. It will enable the bankers to decide on your loan application to take it forward.
● Once the Pradhan Mantri Mudra Yojana loan application is verified and processed, the bank shall release the funds instantly into your bank account. 1. Offline:
● The applicant can visit any NBFC sanctioned by the Reserve Bank of India or APMC authorized by the Agricultural Marketing Board of Maharashtra limited for approved loans.
● The applicant will need a self-written business plan to get your business idea. It will act as an outline of all your goals, ideas, and strategies that you will be able to build upon to ensure your success.
● Complete the Pradhan Mantri Mudra Yojana loan application form. ● Please submit the passport-size photograph and all required documents. ● Once the documents have been verified and approved, the bank will credit the applicant’s account with the desired amount.
What are the benefits of the Pradhan Mantri Mudra Yojana scheme?
There are many benefits to availing of The Pradhan Mantri Mudra Yojana loan. The Mudra Loan Scheme provides MSMEs operating in the manufacturing, trading, and service sectors with credit facilities. These are currently the primary sources of income.
One of the key benefits is that borrowers are not required to provide security or collateral. Additionally, there are no processing charges on the Pradhan Mantri Mudra Yojana loans. Furthermore, the loans are covered under the Credit Guarantee Scheme.
Business owners of SC/ST get special concessions on their interest rates if they avail of the Pradhan Mantri Mudra Yojana loan.
What is the interest rate of the Pradhan Mantri Mudra Yojana scheme?
The lending institution determines the Pradhan Mantri Mudra Yojana loan interest rate, which ranges from 11.15% to 20%. The lender determines the PMMY interest rate based on the person’s credit history and guidelines.
The repayment tenor of Pradhan Mantri Mudra Yojana loans ranges from 12 months to 90 months, depending on the person’s creditworthiness and the amount of money the person wants to borrow.
Pradhan Mantri Mudra Yojana Loans for Women Entrepreneurs
Under the Pradhan Mantri Mudra Yojana, private and public sector banks, NBFCs and Micro Finance Institutions (MFIs) offer collateral-free business loans at reduced or concessional interest rates. The maximum loan amount provided under the Pradhan Mantri Mudra Yojana for women entrepreneurs is up to Rs. 10 lakh, with a repayment tenure of up to 5 years.
One of the significant advantages is that borrowers are not required to offer security or collateral. The Pradhan Mantri Mudra Yojana loans don’t also have any processing fees. The Credit Guarantee Scheme also provides coverage for the loans.
Conclusion
The Pradhan Mantri Mudra Yojana is an initiative to promote microfinance in India. It has significantly impacted the country’s financial inclusion and economy, but it is still not wholly successful. The industry thrived in its first year but did not meet expectations in the second.
The scheme has helped the poor and under-served population by making it easier for them to access loans. It also allowed companies to become more competitive by reducing their cost of capital.
It had resulted in better quality products or services being provided by companies because they can afford to give these things as they can get credit from banks with less money down payments than before when they were using Pradhan Mantri Mudra Yojana loans instead of regular ones, which required more significant amounts down payments which were less likely to be approved by banks.