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Pradhan Mantri MUDRA Loan interest rate: All you need to know

  • Highlights

  • Pradhan Mantri MUDRA Yojana offers loans for businesses

  • MUDRA offers loans across three stages of the business

  • Under Shishu, the MUDRA loan interest is from 1% to 12%

  • For Kishore and Tarun, banks decide the interest rate

In 2018, India had about 51 million MSME units that contributed to around 37% of the country’s GDP and 43% to the nation’s exports, according to a report by The Economic Times. Nevertheless, despite the significant role played by small businesses in economic development, MSMEs face various challenges like shortage in raw material and working capital, outdated technology and insufficient labour, all of which stem from a lack of finance.

To help small businesses address financial challenges, the government launched the Pradhan Mantri MUDRA Yojana on 8 April, 2015. MUDRA offers business loans tailored to three different stages of a business’ growth, with repayment terms ranging from 1 to 5 years. Funding is made available as per the type of loan availed and charged at the applicable Pradhan Mantri MUDRA Yojana interest rate.

Read on to know more about the MUDRA loan interest rate and the sanction offered at various stages.

Pradhan Mantri MUDRA Yojana loan interest rate and sanction limits


You can avail a MUDRA loan under this phase if you are yet to establish your business or it is in its nascent stages. The scheme offers a sanction of up to Rs.50,000 with a tenor of 5 years. The MUDRA loan interest rate ranges from 1% to 12% per annum.


This loan is tailor-made to help you sustain your business. The scheme offers a sanction that ranges from Rs.50,000 to Rs.5 lakh at the MUDRA interest rate decided by the lending institution in question. For the Kishore variant, the MUDRA Yojana interest rate may range from 8.60% to 11.15% or more and is based on the guidelines set by the scheme as well as your credit history. You have to repay the loan along with the MUDRA loan interest within the tenor offered by the lender.


You can avail this loan variant when you wish to expand your business. Under this phase, you can access a sanction from Rs.5 lakh to Rs.10 lakh at the PM MUDRA loan interest rate decided by the lending institution. The lender determines PMMY interest rate based on the guidelines and your credit history. The interest rates range from around 11.15% to 20% and the repayment tenor is decided by the lender.

MUDRA Loan Yojana schemes

MUDRA Yojana offers a range of schemes customised to specific needs. These include the following.

Credit for micro enterprise: This scheme focuses on increasing the inclusion of the general population into the business sector, and offers loans to sectors like food production, textiles and land transport. Here, you can access a loan of up to Rs.1 lakh with microfinance institutions.

Women enterprise programme: Also known as Mahila Udyami Yojana, this scheme offers loans at affordable MUDRA interest rates with a concession of up to 0.25%.

Refinance scheme for banks: This scheme refinances loans of up to Rs.10 lakh extended by banks to MSMEs in the manufacturing and service sector. This is only available if the scheduled commercial banks lend loans at their base rate. Also, rural, regional, and cooperative banks are required to limit their MUDRA Yojana loan interest rate margin at 3.5% over their refinance rate.

MUDRA Card: This debit card is related to the MUDRA loan, and helps beneficiaries access working capital, serving as a means to create a credit history for the user. It can be used to make cash withdrawals from ATMs and payments via POS devices.

Equipment finance scheme: This scheme aims to offer the financial impetus required by microenterprises to expand operations and acquire quality equipment. This way, micro businesses can increase their production and make their ventures more sustainable as well.

MUDRA Loan Yojana eligibility

The eligibility criteria of MUDRA loan are extremely simple. You can apply for a loan under the scheme if you are an Indian citizen and belong to the:

  • Non-farm small/micro enterprise segment

  • Non-Corporate Small Business Segment (NCSBS)

You can also apply if you are a part of a business or as an individual operating as a:

  • Shopkeeper

  • Food-service unit

  • Small manufacturing unit

  • Trade/manufacturing sector unit

  • Fruit and vegetable vendor

  • Service sector unit

  • Truck operator

  • Repair shop

  • Machine operator

  • Artisan and more

In addition to the above, you should:

  • Have a good credit history

  • Have not defaulted on a loan

  • Have the required skills or experience to start, continue, or expand a business

Alternatively, you can apply for a Business Loan with Bajaj Finserv to access a high-value sanction of up to Rs.30 lakh in under 24 hours. Since this is a collateral-free loan, you don’t have to pledge any security and you need to submit only two documents to apply. Be sure to check your pre-approved offer from Bajaj Finserv to get instant approval via a tailor-made deal.

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