Goals and Objectives of e-MUDRA Loans
The goals and objectives of e-MUDRA Loans are multifaceted:
Financial Inclusion: To provide financial assistance to small businesses and entrepreneurs who may not have access to traditional banking services.
Promotion of Entrepreneurship: To encourage and support entrepreneurship by offering easy and accessible credit facilities.
Empowerment: To empower individuals from various sectors, including MSMEs, artisans, and small traders, by providing them with the necessary financial resources.
Digital Transformation: To leverage technology and digital platforms to streamline the loan application and approval process, making it convenient and efficient for borrowers.
Economic Growth: To contribute to the overall economic growth of the nation by fostering the growth of small businesses and facilitating job creation.
Through these objectives, e-MUDRA Loans aim to drive financial inclusion, foster entrepreneurship, empower individuals, promote digital transformation, and spur economic development.
Key features of E-MUDRA Loan
- Purpose: These loans are meant to help small and micro businesses involved in manufacturing, trading, services, or related agricultural work.
- Loan Amount: Under PMMY, you can get loans up to Rs. 20 lakh, divided into four categories:
- Shishu: Up to Rs. 50,000
- Kishore: Rs. 50,001 to Rs. 5 lakh
- Tarun: Rs. 5 lakh to Rs. 10 lakh
- Tarun Plus: Rs. 10 lakh to Rs. 20 lakh (for those who have successfully repaid a Tarun loan)
- No Collateral Needed: You don’t need to provide any security for loans up to Rs. 10 lakh.
- Interest Rates: The interest is decided by the lender, following RBI rules. It usually starts at around 9.30% per year (as per Bajaj Finserv).
- Where to Get the Loan: You can apply at many places – regular banks, Regional Rural Banks (RRBs), small finance banks, Micro Finance Institutions (MFIs), and NBFCs.
- Online Application: You can apply online through platforms like Udyamimitra or directly on bank websites.
- Support for Women Entrepreneurs: Women may get extra benefits like lower interest rates or special support.
Benefits of E-MUDRA Loan
These loans offer several benefits for small and micro-business owners who need financial help:
No Guarantee Needed: You don’t have to provide any security or guarantor.
Loan Amount: You can borrow up to Rs. 10 lakh.
Easy Online Application: The process is quick and can be done online, saving time.
No Processing Fees (Up to Rs. 5 Lakh): Loans up to Rs. 5 lakh usually don’t have any processing charges.
Flexible Repayment: You may get up to 5 years to repay the loan, depending on your eligibility and the loan amount.
Affordable Interest Rates: Banks and other financial institutions offer competitive rates.
Use of Funds: The money can be used to start a new business, grow your current one, or manage day-to-day business needs (working capital).
Easy Eligibility: The rules to qualify are simpler compared to regular business loans.
Eligibility criteria required for E-Mudra loan
To be eligible for an E-MUDRA loan, the borrower must meet the following criteria:
Must be an Indian citizen.
Age between 18 to 65 years.
Applicable for micro and small business owners.
Startups and existing businesses in non-farm sectors are eligible.
Individuals, proprietary firms, partnership firms, or small enterprises can apply.
Documents required for E-Mudra loan
Duly filled loan application form.
Proof of identity (Aadhaar, PAN, Voter ID).
Proof of address (Utility bill, Passport).
Bank statements for the last 6 months.
Business registration or establishment proof.
Recent passport-sized photographs.
Income and financial statements, if applicable.
Types of E-MUDRA Loan
E-MUDRA loan is classified into three types, based on the loan amount and the stage of the business:
Shishu: Under Shishu Mudra Loan, entrepreneurs can avail loans up to Rs. 50,000 for start-ups or new businesses, helping them meet their initial capital requirements and get their business ventures off the ground. This loan scheme offers a simple application process and hassle-free approval, making it an ideal choice for budding entrepreneurs looking for financial assistance to kick-start their entrepreneurial journey.
Kishor: The scheme offers loans ranging from Rs. 50,001 to Rs. 5 lakh, which can be utilised for machinery, working capital, and other operational expenses. With flexible repayment tenure, the Kishor Mudra Loan helps businesses grow and improve their operations. By applying for this loan, entrepreneurs can get the necessary support for their businesses' financial needs, giving them the confidence to take their entities to new heights.
Tarun: This category offers loans from Rs. 5,00,001 to Rs. 10 lakh for well-established businesses that want to grow further or expand into new areas. The Tarun Mudra Loan helps such businesses increase their operations, enter new markets, or invest in better infrastructure and modern technology. It supports experienced business owners in reaching bigger goals and building long-term success.
E-Mudra Loan Interest Rates and Charges
Here is a simple summary of the Mudra loan interest rates and charges under the Mudra scheme for you:
Category
|
Interest Rate/Charges
|
Interest Rate
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8% to 12% per year, depending on the bank’s rules and loan type
|
Processing Fees (Shishu)
|
No processing fee
|
Processing Fees (Kishore & Tarun)
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Small fees may apply
|
How to apply for E-MUDRA Loan?
The procedure for applying for an E-MUDRA loan is simple and hassle-free. The borrower can choose from two options:
Online: To apply online follow the steps below:
Identify eligible financial institutions offering online E-Mudra Loan applications.
Visit the official website of the chosen institution.
Look for the E-Mudra Loan section or online application portal.
Register an account on the website if required, providing necessary details.
Complete the online application form accurately with all required information.
Upload digital copies of supporting documents such as ID proof, business plan, etc.
Review the application thoroughly before submission.
Submit the application electronically through the online portal.
Await confirmation and further communication from the lender regarding the status of your application.
Once approved, follow any additional instructions provided by the lender for disbursement and repayment of the loan amount.
Additional Read: How to Appy Mudra Loan Online
Offline: To apply offline, follow the steps below:
Visit the nearest branch of a financial institution offering E-Mudra Loans.
Request an application form for E-Mudra Loan from the bank representative.
Fill out the application form completely and accurately.
Ensure you have all required documents such as ID proof, address proof, business plan, etc.
Attach the necessary documents to your application form.
Submit the completed application form along with the supporting documents to the bank representative.
The bank representative will verify your application and documents.
Await further communication from the bank regarding the status of your application.
Once approved, fulfill any additional requirements requested by the bank.
Upon approval and completion of formalities, receive the sanctioned loan amount in your designated bank account.
How to increase chances of getting an e-Mudra Loan Approved
Here is a simplified version in UK English for an Indian audience:
Keep a Good Credit Score: Pay your loans and credit card bills on time. This improves your credit score and shows banks that you are reliable.
Have Your Documents Ready: Make sure all important documents—like ID proof, address proof, and business registration—are complete, up to date, and correct.
Share a Clear Business Plan: A well-prepared and practical business plan shows your goals and how you will repay the loan. This builds trust with the lender.
E-Mudra Loan vs Traditional Loans
Feature
|
E-MUDRA Loan
|
Traditional Loans
|
Application Process
|
Fully online, fast and paperless
|
Often offline or partly online; requires visiting the branch and more documentation
|
Loan Amount
|
Up to Rs. 10 lakh under Shishu, Kishore, and Tarun categories
|
Varies based on lender and eligibility; higher limits available
|
Approval Time
|
Faster approval, usually within a few working days
|
Slower processing time due to more checks and formalities
|
Eligibility
|
Aimed at small business owners and MSMEs
|
Broader eligibility; suitable for individuals, firms, and larger businesses
|
Documentation
|
Minimal paperwork required
|
More documents needed, including financials, business proof, etc.
|
Interest Rate
|
8% to 12% per annum (varies by bank/lender)
|
Varies widely based on credit score and business profile
|
Collateral Requirement
|
Usually not required
|
Often required, especially for high-value business loans
|
Processing Fees
|
No fee for Shishu; low charges for Kishore & Tarun
|
Charges vary by lender; often higher than E-MUDRA
|
Target Audience
|
Start-ups, micro and small enterprises
|
Suitable for all business sizes, including SMEs and corporates
|
Conclusion
E-MUDRA loan is a great opportunity for small and micro entrepreneurs to avail easy and affordable credit for their business needs. The scheme aims to promote entrepreneurship, employment, and economic growth in the country. The borrowers can apply for the loan online or offline, depending on their convenience and preference. The loan has a low interest rate, a flexible repayment period, and no collateral requirement, making it attractive and accessible for the borrowers.
