PM Mudra Yojana Loans Up to ₹10 Lakh — No Collateral Required
India's largest collateral-free business loan scheme for small entrepreneurs, street vendors, and self-employed individuals. Over 47 crore loans disbursed since 2015.
All information sourced from MUDRA Ltd. / official .gov.in portals · Last verified January 2025
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New: Tarun Plus Category — Up to ₹20 Lakh for Existing Borrowers Budget 2024 announced a new "Tarun Plus" tier under Mudra for borrowers who have successfully repaid previous Mudra loans. This category offers loans from ₹10 lakh to ₹20 lakh. Operational guidelines are being rolled out through lending institutions — ask your bank about eligibility.
📖 Overview
What Is PM Mudra Yojana — And Who It Is Built For
Pradhan Mantri Mudra Yojana (PMMY) was launched on April 8, 2015. Its full name — Micro Units Development and Refinance Agency — reflects its purpose: providing institutional credit to the 5.77 crore small businesses in India that are outside the formal banking system and traditionally had to rely on moneylenders at interest rates of 36–60% per year.
Mudra loans target the non-farm micro-enterprise sector: vegetable vendors, small manufacturers, beauticians, tailors, repair shop owners, artisans, small traders, food stall operators, truck and taxi drivers, and anyone running or starting a small income-generating business. The key feature is no collateral requirement — you do not need to pledge property, gold, or any asset to get a Mudra loan.
Mudra is not a direct loan from the government. The Mudra (MUDRA Ltd.) body refinances loans given by member lending institutions — scheduled commercial banks, regional rural banks (RRBs), microfinance institutions (MFIs), Non-Banking Financial Companies (NBFCs), and Small Finance Banks. As a borrower, you apply at one of these institutions, which lends you the money under the Mudra scheme guidelines.
💡 Mudra Is Not a Subsidy — It Is a Loan
Mudra loans must be repaid with interest. There is no subsidy element in standard Mudra loans (unlike PM SVANidhi for street vendors, which has an interest subsidy). The benefit is access to formal credit at regulated bank interest rates (typically 10–14% per year) instead of informal moneylender rates (36–60%).
📊 Loan Categories
Shishu, Kishore, Tarun — Which Category Is Right for You
Category
Loan Amount
Best For
Typical Tenure
Shishu
Up to ₹50,000
Startups, street vendors, first-time borrowers
3–5 years
Kishore
₹50,001 – ₹5 Lakh
Established small businesses needing expansion capital
3–5 years
Tarun
₹5,00,001 – ₹10 Lakh
Growing enterprises with proven track record
3–7 years
Tarun Plus (New)
₹10,00,001 – ₹20 Lakh
Existing Mudra borrowers who fully repaid previous loan
5–7 years
Interest Rates — What to Actually Expect
Mudra does not fix a single interest rate — each lending institution sets its own rate within RBI guidelines. Typical rates in 2024–25:
Public sector banks: 8.5% – 12% per year (lowest rates)
Regional Rural Banks (RRBs): 9% – 13% per year
Small Finance Banks: 13% – 18% per year
NBFCs and MFIs: 16% – 24% per year (highest, but most accessible for those without credit history)
⚠️ Always Compare Before Borrowing: The interest rate difference between a public sector bank (10%) and an NBFC (22%) on a ₹3 lakh loan over 3 years is approximately ₹36,000 in additional interest payments. Always apply at a PSU bank first. If rejected, try RRBs and Small Finance Banks before going to NBFCs.
✅ Eligibility
Who Can Apply for a Mudra Loan — Eligibility Criteria
Mudra loans are available to a very wide range of applicants. The main criteria:
Indian citizen, 18 years or older
Running or planning to start a non-farm micro/small enterprise — trading, manufacturing, or service sector
Business should be in the non-corporate sector — proprietorships, partnerships, and small companies qualify; large corporates do not
No existing loan default — you must not be a wilful defaulter on any existing bank loan
Valid Aadhaar card and PAN card (for Kishore and Tarun categories)
A bank account (Jan Dhan account is acceptable for Shishu category)
Who Is Particularly Targeted (Priority Applicants)
While Mudra is open to all, certain categories get preferential processing and in some cases, dedicated loan camps:
SC/ST and OBC entrepreneurs — scheduled for priority processing in all PSU banks
Women entrepreneurs — some banks offer a 0.25% lower interest rate for women borrowers under Mudra
North-East and Hill state residents — special camp-based Mudra disbursements organised periodically
Street vendors — covered under both Mudra and the dedicated PM SVANidhi scheme (which also has interest subsidy)
📄 Documents
Documents Required — By Loan Category
Document
Shishu
Kishore
Tarun
Aadhaar Card
✅ Required
✅ Required
✅ Required
PAN Card
Optional
✅ Required
✅ Required
Passport Photo (2 copies)
✅ Required
✅ Required
✅ Required
Business Address Proof
Basic (rent receipt/utility bill)
✅ Required
✅ Required
Business Registration Certificate
Not mandatory
If registered
✅ Required
Last 6 months Bank Statement
Not required
✅ Required
✅ Required
ITR / Income Proof
Not required
Optional (helps approval)
✅ Required (last 2 years)
Business Plan / Quotations
Not required
Recommended
✅ Required
Caste Certificate
If SC/ST/OBC
If SC/ST/OBC
If SC/ST/OBC
🖥️ How to Apply
Step-by-Step Application Process — 2025
1
Decide Your Loan Amount and CategoryAssess how much you need and whether it falls under Shishu, Kishore, or Tarun. Be realistic — borrowing more than you need increases your EMI burden without business benefit.
2
Apply Online via Udyamimitra PortalThe fastest way: visit udyamimitra.in — the official Mudra loan portal. Register, fill the application form, and choose from multiple lending institutions. You can compare rates and submit to multiple lenders simultaneously.
3
Or Visit Any PSU Bank Branch DirectlyWalk into any branch of SBI, Bank of Baroda, Punjab National Bank, Canara Bank, or any other public sector bank. Ask specifically for "PM Mudra Yojana loan application." The branch manager cannot refuse to give you an application form.
4
Submit Application with DocumentsSubmit the filled form along with your documents. For Shishu loans, many banks process on the spot. For Kishore and Tarun, expect 7–21 working days for approval after document verification.
5
Receive Mudra Card (for Working Capital Loans)If your Mudra loan is for working capital (not a term loan), you will receive a Mudra RuPay Debit Card — a special card you can use to draw funds as needed, up to your sanctioned limit. This works like an overdraft facility and is unique to Mudra scheme.
6
Disbursal and RepaymentFunds are transferred directly to your business account (or personal account for Shishu). Repayment is in monthly EMIs. Pay on time — a clean repayment record makes you eligible for Tarun Plus category in your next loan cycle.
📌 CIBIL Score and Mudra Loans: For Shishu loans up to ₹50,000, banks generally do not require a CIBIL score — this is deliberately designed for first-time borrowers with no credit history. For Kishore and Tarun, a CIBIL score above 650 significantly improves approval chances. If you have no score, start with a Shishu loan and repay cleanly to build credit.
📖 Real-Life Scenario
How a Mudra Loan Changed a Business — A Real Example
Kavita, a 34-year-old from Pune, ran a small tailoring unit from home but had no formal credit history. She needed ₹40,000 to buy an industrial sewing machine to take larger orders from a garment shop. No bank would lend her money without collateral — until she heard about PM Mudra Yojana.
She visited her nearest SBI branch, asked for the Shishu Mudra loan form, and submitted her Aadhaar, 2 photos, and a handwritten note describing her tailoring business. Within 5 days, ₹40,000 was sanctioned with no collateral and no guarantor. She bought the machine, doubled her order capacity, and repaid the loan within 8 months. She then applied for a ₹2 lakh Kishore loan to expand further — approved in 10 days based on her clean repayment record.
📌 Start Small, Build Credit: A clean Shishu repayment record is your best qualification for Kishore and Tarun loans. Start with what you need, not the maximum available.
❓ FAQ
Frequently Asked Questions — Verified 2025
Yes, for Shishu category (up to ₹50,000). New ventures with no existing revenue can qualify for Shishu loans. You need a basic business plan and identification documents. For Kishore and Tarun, banks prefer at least 6–12 months of existing business activity with bank transactions as evidence.
Regional Rural Banks (RRBs) and Small Finance Banks (like Jana Small Finance Bank, AU Small Finance Bank) typically have faster approval processes than large PSU banks. Bandhan Bank and Ujjivan SFB are known for accessible Mudra disbursements in rural areas. For lowest interest rates, SBI and Bank of Baroda are best but have stricter documentation requirements.
Banks must provide a written reason for rejection. Common reasons: low CIBIL score, existing loan default, incomplete documents, or insufficient business income. Fixes: (1) Apply at an RRB or Small Finance Bank instead of a large bank. (2) Try via Udyamimitra portal — it connects you to multiple lenders simultaneously. (3) If you believe the rejection was unfair, file a complaint with the bank's grievance cell. Escalate to the Banking Ombudsman if needed.
Standard Mudra loans have no interest subsidy. However, if you are a PM SVANidhi beneficiary (street vendor), there is a 7% interest subsidy on loans under that scheme. For SC/ST entrepreneurs under Stand-Up India scheme, there is a different loan product. Always check all applicable schemes before choosing — don't assume Mudra is your only option.
No. Mudra loans are explicitly for non-farm activities — trading, manufacturing, and services. For agriculture-related credit, apply under Kisan Credit Card (KCC), PM-KISAN, or NABARD schemes. However, agro-processing businesses (pickle making, dairy, poultry) are eligible under Mudra since they are processing/manufacturing activities.
Under the standard Tarun category, you can get up to ₹10 lakh without collateral. The new Tarun Plus category announced in Budget 2024 allows up to ₹20 lakh for borrowers who have successfully repaid a previous Mudra loan. Contact your bank for Tarun Plus eligibility details.
Some public sector banks offer a 0.25% interest rate concession for women borrowers under the Mudra scheme. Additionally, women-led SHGs and JLGs often get priority processing. Women entrepreneurs should specifically mention their gender and ask about any applicable rate concession when applying.
The Mudra toll-free helpline is 1800-180-1111. Also accessible via 1800-11-0001. Call for guidance on which lender to approach, which loan category applies, or to report issues with your application. You can also apply online at udyamimitra.in.
Disclaimer: MeraHaq is an independent citizen information platform. Not affiliated with any bank, MUDRA Ltd., or government department. All information sourced from official .gov.in portals and RBI guidelines. Interest rates are indicative and vary by lender. Last verified: January 2025.