What is Pradhan Mantri Mudra Yojana?

Pradhan Mantri Mudra Yojana, also called PMMY, was launched by the government of India in 2015 as part of the Pradhan Mantri Jan Dhan Yojana project. Since then, over 5 crore loans have been sanctioned to small business owners, with an average loan value of Rs 13000. The loan sanctioning criteria are as follows

Why it is important

PMMY is a lending program for non-corporate, non-farm small businesses. It seeks to provide loans of up to Rs 10 lakh to such businesses from banks and NBFCs. It is intended to complement existing schemes for financing small business and supplement efforts at creating jobs. The finance ministry announced on January 16 that a target of Rs 1 lakh crore has been set for disbursement in 2017-18 through PMMY.

Who can benefit from PMMY

The prime minister has announced his vision of financial inclusion, and Pradhan Mantri Mudra Yojana (PMMY) is a step towards that. You do not need to have an overdraft facility in your bank account to avail of loans under PMMY. Unlike other loan schemes that require you to prove that you can repay it within six months, there are no restrictions on how long you will take to pay back under PMMY. All you need is a valid KYC document. If you want to start a business or want to expand your existing one, then PMMY can be your best bet for availing low-cost funds from banks and NBFCs.

Features of PMMY

It was launched by Prime Minister Narendra Modi on April 8, 2015 as a part of ‘Stand up India’ campaign. It aims to promote bank financing to SHGs in order to assist them in growth and development as well as improve credit flow in non-corporate unorganized sector. The scheme provides loans between Rs 50,000 and Rs 10 lakh at an interest rate of 6% per annum for both men and women belonging to SC/ST/OBC/Minority communities. The loan tenure ranges from one year to five years with no processing fee charged. The repayment period is flexible based on requirement.

How to avail loan under PMMY

If you are a person in any income bracket from any part of India, you can take loans under PMMY. You can avail an amount ranging from Rs. 50,000 to 10 lakhs, for a period of 1-7 years and repayment capacity ranging from Rs. 1500 to 15000 per month. The bank decides based on your credit history and payment capacity whether to lend you money or not.

Who are not eligible for PMMY

The Pradhan Mantri MUDRA Yojana was launched by Prime Minister Narendra Modi in April 2015 with an aim to provide financial assistance to micro and small enterprises (MSEs) for up to Rs 10 lakh for non-farm sector start-ups. Besides funding, it also aims at providing other benefits like interest subsidy of 6% on working capital loans from scheduled commercial banks (SCBs) for a period of three years.

Documents required for Loan processing

If you are an entrepreneur and want to start a business of your own then you must be willing to take a loan from any source of finance. In recent times, there has been a shift in mindset towards lending money to small businesses by providing them with loans at reduced interest rates and more flexible terms. This new step has given entrepreneurs across India more control over their money which they can utilize in making profits instead of paying interest charges.

List of banks who are participating in PMMY

1. Andhra Bank, 2. Axis Bank, 3. Bank of Baroda, 4. Canara Bank, 5. Catholic Syrian Bank, 6. DCB Bank Ltd., 7. DenaBanks (Mumbai), 8. DICGC Credit Co-operative Society Ltd., 9. Federal Bank Ltd., 10. HDFC Bank Ltd., 11. ICICI Bank Ltd., 12. IDBI Bank Limited, 13. Indian Overseas Bank, 14. IndusInd Bank Limited, 15.