Pradhan Mantri Mudra Yojana (PMMY): How to Apply, Eligibility, Loan Amount & Documents Required

Earlier, small and micro enterprises often found it challenging to avail loans from banks due to a lack of collateral and were compelled to borrow high-interest loans from unofficial lenders. To support these businesses andfulfil the objective of "funding the unfunded," , the Government of India introduced Pradhan Mantri Mudra Yojana (PMMY) in 2015.

Let’s understand in detail what the Pradhan Mantri Mudra Yojana (PMMY) is, the types of loans offered under the scheme, its eligibility criteria, and the application process.

What Is Pradhan Mantri Mudra Yojana (PMMY)?

Pradhan Mantri Mudra Yojana (PMMY) is a government scheme launched to provide collateral-free loans of up to ₹20 lakh to income-generating non-corporate, small and micro enterprises, as well as women entrepreneurs. The term ‘MUDRA’ stands for Micro Units Development and Refinance Agency Ltd, a public sector financial institution operating under PMMY to support the development and refinancing needs of micro enterprises.

Applicants can borrow loans under the Pradhan Mantri Mudra Yojana (PMMY) through eligible financial intermediaries approved by MUDRA Ltd. as Member Lending Institutions (MLIs), which include the following:

• Public Sector Banks
• Private Sector Banks
• State-operated cooperative banks
• Rural banks from the regional sector
• Micro Finance Institution (MFI)
• Non-Banking Finance Company (NBFC)
• Small Finance Banks (SFBs)

The interest rates applicable to loans provided under the PMMY are determined by individual Member Lending Institutions (MLIs) in accordance with the guidelines issued by the RBI (Reserve Bank of India), which require banks to set reasonable interest rates.

Banks may charge an upfront fee for Kishore, Tarun and Tarun Plus categories as per their internal regulations. However, no upfront fees apply to Shishu loans.

Businesses engaged in non-farming, trading, manufacturing, and service activities with funding requirements of up to ₹20 lakh can apply for PMMY.

How to Apply for Pradhan Mantri Mudra Yojana (PMMY)?

Applicants can apply for PMMY online or offline.

Apply for Pradhan Mantri Mudra Yojana (PMMY) Online

Step 1: Visit the JanSamarth web portal launched by the Government of India.

Step 2: Understand the different PMMY loan categories and their loan amount, eligible businesses and individuals.

Step 3: Scroll to the bottom of the page and click ‘Check Eligibility’ to start the loan application.

Step 4: Select the purpose of your loan and provide the requested personal and business details. Enter how much of the required funding you are fulfilling so your loan amount can be determined.

Step 5: Based on the information entered, the portal will find and recommend government schemes you’re eligible for, along with the monthly EMI, interest rates, loan tenure, and subsidy, if any.

Step 6: You can edit the details entered or click on ‘login to apply’ if the government scheme and its conditions align with your requirements and affordability.

Step 7: Log in with your mobile number, enter the OTP, and proceed with the application. You will be redirected to the government web portal. Fill in the application form, attach the required documents and submit your application.

Apply for Pradhan Mantri Mudra Yojana (PMMY) Offline

Eligible applicants can visit the nearest branch of an eligible member institution under PMMY to understand the available loan categories, eligibility criteria, and the bank’s interest rates. Once you’ve decided which loan you wish to borrow, request the PMMY application form, attach the required documents, and submit your application.

Documents Required for Applying to Pradhan Mantri Mudra Yojana (PMMY)

Applicants are required to submit the following documents to apply for the Pradhan Mantri Mudra Yojana (PMMY).

For Shishu Loan

• Proof of Identity, such as a self-attested copy of Voter’s ID Card / Driving Licence / PAN Card / Aadhaar Card / Passport.
• Proof of Residence, such as utility bills, rental agreement, Passport or Aadhaar card.
• Two recent passport-sized photographs.
• Quotation of Machinery or other items to be purchased.
• Caste Certificate
• Bank Statement
• Address of the Business Enterprise, such as copies of valid Licences / Registration Certificates, etc.

For Kishore, Tarun and Tarun Plus Loan

• Business address proof, such as a rental agreement or ownership documents.
• Udhyam registration certificate
• Sales volume for the current financial year.
• The previous two years’ unaudited balance sheet for the business.
• Proforma invoices or quotations of the machinery and equipment to be purchased.
• Asset and Liability statement of the applicant
• Income Tax Returns (ITR) filed.

FAQs

Can I take a Mudra loan to purchase CNG tempos or rickshaws?

Yes, you can apply for Pradhan Mantri Mudra Yojana (PMMY) to obtain a loan for purchasing CNG tempos and rickshaws used for business purposes.

Who can apply for the Tarun Plus loan under PMMY?

Only businesses that successfully repaid the ‘Tarun’ loan under PMMY are eligible to apply for the Tarun Plus loan.

Are businesses such as salons, beauty parlours, and gyms, etc., eligible for PMMY?

Yes, businesses such as salons, beauty parlours, and gyms come under the community, social and personal services sector and hence are eligible for PMMY.

Can I apply for PMMY to purchase machinery for manufacturing purposes?

Yes, you can apply for loans under PMMY for purchasing machinery for business and manufacturing purposes.

What is the maximum amount I can borrow under Pradhan Mantri Mudra Yojana (PMMY)?

You can apply for loans up to ₹20 lakh under the Tarun Plus category, provided that you’ve successfully repaid the Tarun loan.