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Mudra Loan Interest Rates 2019

Pradhan Mantri Mudra Yojana is a special scheme set up by the Government of India through an institution named
Micro Units Development & Refinance Agency Limited (MUDRA) in order to provide financing aid through loans to
the non-corporate non-farm sector income generating activities of micro and small entities (subject to those
enterprises with credit needs below INR 10 lakhs). The Pradhan Mantri Mudra Yojana (PMMY) has three facilities or
options available for catering to enterprises at different stages of growth and financing needs. These options are
Shishu, Kishore and Tarun.

Mudra Loan Bank Interest rate Tenure

HDFC 12.75% to 20% 1-5 years

HDBFS 15.95% to 18.95% 1-3 years

Tata Capital 13.49% to 19.50% 1-5 years

Kotak Mahindra Bank 11.5% to 18% 1-5 years

Capital First 13% to 20% 1-5 years

Citibank 12.75% to 15.75% 1-5 years

IndusInd Bank Ltd 12.99% to 18.25% 1-5 years

Fullerton 19.50% to 37% 1-4 years

Standard Chartered Bank 12.50% to 17% 1-5 years

ICICI Bank 11.49% to 17.50% 1-5 years

Aditya Birla Finance Ltd 14% 1-3 years

x
Allahabad Bank 13.70% 1-5 years

Bank of Baroda 14.15% 1-3 years

 y
Mudra Loan Bank Interest rate Tenure
Bank of Maharashtra 15.20% 1-3 years

Bank of India 12.7% to 14.7% 1-3 years

Canara Bank 13.65% 1-3 years

Central Bank 12.70% 1-3 years

Dena Bank 13 % to 14% 1-3 years

IDBI Bank 12.75% to 13.75% 1-5 years

Indian Bank 12.65% to 13.65% 3 years

Indian Overseas Bank 14.70% 1-5 years

Karur Vysya Bank 13.9% to 16.40% 1-3 years

Oriental Bank of Commerce 11.2% to 12.95% 1-5 years

South Indian Bank 14.80% 1-4 years

State Bank of Bikaner and Jaipur 13.2% to 14.2% 1-5 years

State Bank of Hyderabad 15.25% to 15.75% 1-3 years

State Bank of India 17.80% 1-4 years

State Bank of Mysore 16.90% 1-3 years

State Bank of Patiala 12.65% to 14.65% 1-5 years

State Bank of Travancore 13.2% to 13.45% 1-5 years

Tamilnad Mercantile Bank 14.4% to 16.4% 1-5 years

UCO Bank 14.1% to 15.1% 4-5 years

Union Bank of India 14.4% 1-5 years

Vijaya Bank 13.7% 1-5 years

Mudra Loan Scheme Limits

The loans availed as per this scheme can be used for multiple purposes, like vehicle loans for automobiles meant for
commercial purposes, business instalment loans that can aid in working capital financing / purchase of plant and
machinery / renovating the infrastructure and/or business loans group and rural business credit.

As per the financing options available under the scheme, the interest rates and loan limits vary to accommodate for
the growth stage of the concerned enterprise availing the loan. As of November 2015, the applicable rates and limits x
are as follows
 1. Shishu – Loans up to a maximum of INR
50000 with rate of interest being 1% per
month or 12% per annum. Repayment period
up to 5 years
2. Kishore – Loans exceeding INR 50000 up to
INR 5 lakhs. The rate of interest will be
dependent on the bank, in accordance with
the schemes guidelines, keeping the credit
history of the applicant in view. Repayment
period based on the discretion of the bank
3. Tarun – Loans exceeding INR 5 lakhs up to
INR 10 lakhs. The rate of interest will be
dependent on the bank, in accordance with
the schemes guidelines, keeping the credit history of the applicant in view. Repayment period based on the
discretion of the bank

It is clear from the above mentioned points that the first option which caters to budding businesses has the most
affordable rates and a fixed repayment term irrespective of the applicant’s or the business’ performance and history.
The above, however are subject to change based on the scheme’s guidelines.

A total of 27 Public Sector Banks, 17 Private Sector Banks, 31 Regional Rural Banks, 4 Co-operative banks, 36
Microfinance Institutions and 25 Non-Banking Financial Institutions have currently been selected to allow
disbursement of this loan. 60% of the loans under this scheme are set to be offered through the ‘Shishu’ option and
the rest 40% will be through the ‘Kishore’ and ‘Tarun’ schemes.

Highlights of the 2018-19 Union Budget on Pradhan Mantri

Mudra Yojana (PMMY) or Mudra Loan
The 2018-19 Union Budget meeting, led by the Finance Minister of India - Mr. Arun Jaitley, was commenced on 1
February 2018. To improve the financial condition of the country, this meeting focused on multiple sectors such as
Micro, Small, and Medium Enterprises (MSME), agriculture and rural economy, infrastructure, finance, health, social
security, education, tax, and others. The minister also concentrated on Mudra Loan offered under the Pradhan
Mantri Mudra Yojana (PMMY).

Since its inception in April 2015, a total of 10.38 crore self-employed individuals have availed the benefits of Mudra
Loan by withdrawing a total credit of Rs.4.6 lakh crore. Out of the total number of loans, 76% of the loan accounts
belong to women while over 56% belong to individuals who are SC, ST, or OBC. As the scheme has exceeded the
targets set for all the previous years, the Government has decided to set the target for Mudra Loan during the
upcoming financial year of 2018-19 at Rs.3,00,000 crore.

The meeting also indicated that this year’s focus will be on Non-Bank Finance Companies (NBFC). When the MSMEs
were struggling to receive financing after the country was hit by demonetisation, the NBFCs of India had stepped up x
to the task and provided financial aid to many. This not only helped MSMEs receive the monetary relief they required
during a their time of need, but also proved that NBFCs are powerful vehicles that can be used to provide Mudra
Loans to the masses. Keeping this in mind, the Finance Minister has also announced during the Union Budget that the
eligibility criteria and refinancing policies for NBFCs will be reviewed to offer them better chances of providing loans.

In addition to MSMEs, Mudra Loans of Rs.10 lakh can also be availed for non-agricultural activities or projects that
are partially aligned to agriculture such as poultry, dairy, bee keeping, and many more. Depending on the growth
stage and credit requirements of the micro, small, or medium enterprise, an entrepreneur can avail 3 types of loans
under PMMY - Shishu, Kishor, and Tarun.

FAQs
1. What is the interest rate under the Mudra/PMMY Scheme?
Interest rates are dynamic and decided by the lending institution under broad guidelines from the RBI so as to
keep the products cost effective.

2. What is the target audience for Mudra Scheme?

Mudra is targeted at Non-Corporate Small Business (NCSB) segment that includes business entities such as
small manufacturing plants, shopkeepers, service sector installations, vegetable/fruit vendors, repair shops,
truck operators, food-service units, artisans, machine operators, small industries, food processors etc.

3. Why are the interest rates different for different institutions?

Mudra loans are unsecured in nature as no collaterals are required to avail the loan. This is a reason why
interest rates vary from institution to institution as every organization calculates the risk factor on its own and
establishes rates accordingly.

4. Are the loans subsidised by the central government?

No, these loans are not subsidised by the central or state governments.

5. What does the Mudra application form look like?

For the starting category of Shishu Loans, a 1 page application form needs to be duly filled and submitted. For
Kishor and Tarun categories of loans, a 3 page application form needs to be submitted.

6. Where can I find the Mudra Loan application forms?

You can find the application forms online on the Mudra website or get one from any of the intermediaries.

7. What is the repayment criteria for Mudra Loans?

The repayments terms and conditions are decided by the intermediary lending institution according to its rules
considering the cash flow of the business in question.

8. Do all banks in India fall under the Mudra Scheme?

Yes, the Department of Financial Services (DFS) has already sent advisories to Public Sector Banks, Scheduled
Commercial Banks and Regional Rural Banks for bringing all loans up to Rs.10 lakhs disbursed for non-farm
income generation activities after April 7th 2015 under the Mudra Scheme. The DFS has also instructed all
banks to provide loans under the scheme and put targets per branch.
x
9. Is the PMMY Scheme active now?
Yes, the scheme has been active since April 8th 2015 throughout the country.
 10. How long is the processing time for Loans under the Mudra Scheme?
Lower amount Shishu loans are generally disbursed within 7-10 days while the other categories have
processing times varying from lender to lender.

A GST rate of 18% will be applicable on banking services and products from 01 July, 2017.

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News About Mudra Loan Interest Rates
Pradhan Mantri Mudra Yojana Funds
Micro and Small Units

Small scale and micro industries are gaining momentum all over the country as Prime Minister, Narendra Modi urges
more and more people to quit being job hunters and start being job creators.

One such financial measure known as the Pradhan Mantri Mudra Yojana essentially funds such small scale business
enterprises that hold potential to grow in the future. Because the proportion of people working in small enterprises is
significantly higher than those working at multinational corporations, the Government of India has launched the
Pradhan Mantri Mudra Yojana under the Micro Units Development and Refinance Agency, (MUDRA) bank.

The Mudra loan will fundamentally help enhance the economic and financial support that are provided to small and
micro units. It is nothing but a funding model aimed specifically at the non-farming and non-corporate sector, to help
them generate income for enterprises and activities who credit requirements are less than Rs.10 lakh.

12 October 2018

MUDRA to assess the Pradhan Mantri

Mudra Yojana (PMMY) Scheme

The Pradhan Mantri Mudra Yojana Scheme was introduced to disburse loans to small and medium (SME) businesses
across India. The scheme has completed 3 years and has disbursed about Rs.6-lakh crore to various businesses. With
regard to this, an apex body for this scheme, the Micro Units Development & Refinance Agency (MUDRA) is about to
commission a massive field-based assessment through an independent agency.

A senior official of MUDRA stated that the purpose of this assessment is to check for any opportunity for income growth
to microentrepreneurs, especially disadvantaged individuals and women. He also stated that MUDRA is trying to
document the impact of PMMY for the last 3 years. Launched in April 2015, MUDRA has successfully disbursed
Rs.2,46,437 crore in 2017-2018 and around Rs.75,954 until 24 August in the current financial year. The overall total
number of current loan accounts is more than 13 crore. Loans are offered under 3 categories namely, Shishu which
offers up to Rs.50,000, Kishor which offers from Rs.50,000 up to Rs.5 lakh, and Tarun which offers from Rs.5 lakh up to
Rs.10 lakh. MUDRA is also looking into other channels, such as microfinance institutions and intermediary organisations
to leverage additional funds. There has also been a demand from certain sections to upgrade the loan structure which is
being looked into. This assessment is expected to be completed within 6 months.

28 September 2018

PM: Over 13 Crore Mudra Loans x

Sanctioned
Prime Minister Narendra Modi has claimed that over 13 crore people have been provided with loans under the Pradhan
Mantri MUDRA Yojana. The Prime Minister made the statement while addressing the country on Independence Day.

According to Mr. Modi, of the 13 crore loans sanctioned, nearly 4 crore have been disbursed to first-time borrowers. The
MUDRA loan was launched by the Prime Minister in 2015 to provide financial aid to those individuals in the small
business sector.

The MUDRA loans can be availed for a minimum of Rs.50,000 to a maximum amount of Rs.10 lakh.

29 August 2018

MUDRA Scheme to Offer 45% Loans to

General Category and 32% to OBCs

Under the Micro Units Development and Refinance Agency Limited (MUDRA) scheme introduced by the Central
Government, West Bengal, Karnataka, and Tamil Nadu are the top 3 states to receive the maximum number of loans.
While the entrepreneurs belonging to the General category received 45% of the total number of MUDRA loans, the
Other Backward Class (OBC) category were offered around 32% of the total loans under MUDRA scheme. On the other
hand, businessmen belonging to the Schedule Castes (SC) received 18% and those from the Scheduled Tribes (ST)
category were offered just 5% of the total MUDRA scheme loans.

As per a survey conducted by the National Sample Survey Organisation (NSSO) in 2017, the population of the OBC
category amounts to 40.94% of the total population in India. While the SC population comprises 19.59% and the ST
population is 8.63%, the rest of the categories make up for 30.80% of the total population of the country. The MUDRA
loans were introduced by the government to offer financial aid to the non-corporate small business (NCSB) or informal
segment in order to help them grow by taking care of their business needs while adding them into the mainstream.

As per the data presented by the finance ministry to the Lok Sabha, approximately 12 crore beneficiaries have enrolled
for the Mudra scheme and a total amount of loans worth Rs.6 lakh crore has been disbursed by banks and other financial
organisations till date. Out of the total number of loans offered, around 35% of the loans were given to entrepreneurs
from Karnataka, Tamil Nadu, and West Bengal. 60% of the total loans disbursed in Himachal Pradesh, West Bengal,
Andhra Pradesh, and Delhi were offered to business from the general category. In Tamil Nadu, Karnataka, Telangana,
and Gujarat, 60% of the total sanctioned loans were given to the general-category entrepreneurs. On the other hand, the
entrepreneurs from the OBC category outnumbered the loan beneficiaries from the general category in Jharkhand,
Chhattisgarh, Odisha, and Madhya Pradesh. While Bihar is the only state wherein over 55% loan beneficiaries were from
the OBC category, Meghalaya and Mizoram were the only 2 states in which ST loan beneficiaries outnumbered the rest
of the categories.

14 August 2018
x
12.27 New Loan Accounts Opened
Under the Mudra Yojana

3.49 crore new entrepreneurs have reaped the benefits of the Pradhan Mantri Mudra Yojana (PMMY). To date, over 12
crore loans have been sanctioned under the scheme. The PMMY was set up to help individuals from the non-agricultural
sector by providing collateral-free loans to establish small businesses and enterprises.

Other scheme launched by the government include the Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) set up to
provide incentive to individuals who contribute the entire 12% of the EPF contribution. This scheme has benefitted over
61 lakh beneficiaries so far.

9 August 2018

L&T Finance Holdings Rural Loan Book

Reaches Rs.19,000 Crore

Since the past 2 years, L&T Finance Holdings (LTFH) has been capilising on the healthy rural economy. The lending
business of the financial services company has grown in that space from Rs.8,586 crore in June 2016 to the current
Rs.19,000 crore by the end of June 2018. With the government delivering several macroeconomic shocks to the
economy, financial services industry collections witnessed a decline during the FY 2017-18. The industry accepted 2017
to be an outlier year and the cash shortage experienced by people from the rural economy was particularly
unfavourable. As per the data from the Central Statistics Office (CSO), the agriculture growth rate in terms of gross
value added (GVA) witnessed a sudden reduction from 11.6% in FY 2016-17 to 4.6% in FY 2017-18.

While a number of businesses use data in order to communicate with their business strategy teams, and L&T Finance
Holdings uses a data intelligence systems to conduct all tasks related to rural lending. This includes monitoring over 4
million micro-loan customers and 5 million total rural customers. Approximately 2 years ago, L&T Rural Finance planned
to renew its business model while putting more emphasis on data intelligence. The algorithms under data intelligence
helps create improved portfolios and takes better credit decisions by 40% as compared to human underwriters. This
reduces individual staff discretion and manual intervention to a minimum. This has led the company’s front line staff
working at 12,000 points of presence in the country to concentrate on developing relationships with clients and
customers. This has helped them improve their local knowledge to further improve the data intelligence capabilities of
the company.

7 August 2018

Bank Credit Increases to 12.44%;

Deposits Increase by 8.15%
x

A di d f h RBI b k di h b 12 44% R 86 l kh i h f i h 20 J l
According to data from the RBI, bank credit has grown by 12.44% to over Rs.86 lakh crore in the fortnight to 20 July
2018. The same period recorded an 8.15% increase in deposits amounting to Rs.1,14,38,121 crore. In the same time
frame for 2017, bank credit stood at over Rs.76 lakh crore while deposits stood at Rs.1,05,75,615.

The deposit seems to have grown at a slower pace when compared to the the increase in bank credit. Additionally
growth was also noted in non-food bank credit, loans to agriculture, and personal loans by 11.1%, 6.5%, and 17.9%
respectively.

7 August 2018

Mudra scheme for weavers - Tamil

Nadu stands first

Tamil Nadu stands in the first position as far as the implementation of the Mudra Loan scheme for weavers is concerned.
The statistics was for the 2016-17 and 2017-18 period, said the state minister for handlooms and textiles. The number
of loans disbursed under the scheme were 18,488 during 2017-18, higher than that disbursed in 2016-17.

The Mudra loan programme was initiated by the Indian textile ministry, wherein large banks (run by states) offer
concessional loans up to Rs.5 lakh to handloom weavers. This facility was extended across all states.

The state government of Tamil Nadu has set aside Rs.49,045 lakh for distributing free sarees and dhotis to weavers. Free
electricity is also being provided to powerloom weavers, as funds worth Rs.43,644.45 lakh have been allocated for the
same.

29 June 2018

Tamil Nadu Heads in Weaver Mudra

Scheme Implementation

The Minister of Handlooms and Textiles, O S Manian, stated that Tamil Nadu is the forerunner in the implementation of
the Weaver Mudra Scheme during the financial year 2017-18 and 2016-17. The scheme was proposed to offer coverage
to 15,000 handloom weavers within the state during FY 2017-18. During this time, the state has worked tirelessly and
disbursed 18,488 Mudra loans worth Rs.90.12 crore. On the other hand, a total of 17,031 Mudra loans worth Rs.82.38
crore were offered in 2016-17. For the current financial year, the government has allocated a corpus of Rs.49,045 lakh.
In order to provide free electricity to the handloom weavers, the government has allocated funds of Rs.484.50 lakh while
Rs.43,644.45 lakh has been earmarked for powerloom weavers. The government provides free electricity up to 750
units bimonthly to 1,24,877 powerloom units while 1,11,394 handloom weavers get 200 units of free electricity
bimonthly. x

20 J 2018
 20 June 2018

NPA Ratio of Mudra Yojana Stood at

4% Only as of December 2017

While the gross non-performing asset (NPA) ratio of the entire banking industry stood at around 10%, the NPA ratio for
that of Mudra Yojana was only 4% as on December 2017. The state-run financial services organisations except State
Bank of India (SBI) have broken the record of 4.2% gross NPA set by their private-sector peers under this scheme.
Furthermore, the department of financial services has reported that the NPA ratio of SBI stood at only 3% against its
total bad loan ratio of 10.35% as on December 2017.

As per a senior official of the finance ministry, the high repayment rate for the Mudra scheme can be attributed to the
fact that these are short-term loans so the NPA levels do not have a chance to increase in later years, unlike long-term
loans. However experts urge the government and banks to exercise caution so that fraudsters do exploit this lending
scheme as it not require any collateral.

13 June 2018

    

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