Mudra Loan Scheme for Potential entrepreneur and Street vendors.

Mudra Loan is provided under the central government scheme MUDRA. The Government of India has launched a scheme of financial assistance to develop and encourage the spirit of business and employment.

The name of this scheme is Mudra Yojana (Micro Units Development Refinance Agency). Through this scheme, the government has targeted to provide finance to the unorganized sector businesses and small businesses facing financial problem at affordable interest rate as well as to encourage interest and willingness of the youth in business activities.

In India till now a large section of the country’s population, especially the lower strata, has been deprived of the benefits of the formal banking system. They depend on moneylenders for everything from farming to doing small business. They have to pay huge interest on loans taken from moneylenders. Then they get caught in such a maze of debt that their life becomes difficult.

 On the other hand, small business units of the country are also facing a similar problem. Till now there was neither any regulatory body nor any banking system for such units from which they could get financial support. The 2013 survey of the National Sample Survey Office (NSSO), an organization of the Ministry of Indian Statistics, Government of India, states that there are about 577 million small business units in the country and whose control is under sole proprietorship.

These units include activities ranging from production to manufacturing and retail. Along with this, about 1.25 Crore people are getting employment directly and indirectly from these units. In such a situation, it was necessary that the government should bring such a visionary plan, which would not only provide financial support and strength to the small business units, but also generate employment.

Ultimately, cherishing the ambition of strengthening and exploiting these small business units, the Finance Minister Late. Arun Jaitley, had announced the establishment of Mudra Bank in the budget speech of 2015-16.

After this, implementing the promise of the government, Prime Minister Narendra Modi dedicated the Micro Units Development and Refinance Agency Limited i.e. Mudra Loan to the nation on April 2015 with a corpus of Rs 20,000 crore. A loan guarantee fund of Rs 3,000 crore has also been added to this huge fund.

This agency, newly created by the government, will cooperate with all those financial institutions which carry out the business of giving loans to micro and small business units engaged in production, trading and service related activities.

What is Mudra Loan Scheme?

Mudra Scheme  means Micro Units Development Refinance Agency, which is called MUDRA in short meaning Mudra means money. This is the main point of this scheme. When we say ‘MUDRA’ it mean money, and the scheme was launched to provide financial assistance to street vendors. In short Mudra Loan is a loan scheme, by in which street vendor and small businesses can apply for loan, when they needed. It is announced on April, 2015.

Objectives of Mudra Loan Scheme

The main objective of the Mudra Loan yojana are as below.

• To strengthen the regulation and active participation of the institutions providing micro finance in the form of loans and its financial system and to provide stability to it.
• To cooperate in finance and credit activities to other agencies including micro financial institutions which provide loans to small businessmen, shopkeepers, self-help groups etc.
• To register all existing Micro Financial Institutions (MFIs) and make a merit list based on their performance. This list will help in assessing the record of the institution and help the borrowers to choose the best MFI. On the other hand, the creation of a merit list will increase the competition among the institutions, which will motivate all of them to perform better. Ultimately, the borrowers will get the benefit of this.
• Mudra Bank will also provide proper guidelines regarding business to the borrowers, which will help in getting the business out of the crisis. Along with this, Mudra Bank will also cooperate in determining the procedure to be followed for recovery of money in case of default.
• Mudra Bank will formulate a credit guarantee scheme to guarantee Mudra loan to small business units.
• Mudra Bank will provide effective technology to the lending institutions to help in the process of taking and disbursing loans.
• Under the scheme, Mudra Bank will create a suitable framework so that an effective system can be developed for providing small loans to business units.
• Small cottage industries do not get financial help from the bank easily, they are not able to fulfill the rules of the bank, due to this they are unable to expand their business, hence the Mudra Loan scheme is being started, its main objective is to provide financial assistance to small business and potential entrepreneur .

Eligibility Criteria to get a Mudra Loan

Although under the Mudra scheme, every person those who want to their own business and units under SSI is eligible to take loan under Mudra Loan. But there are some other eligibility criteria which are as follows.

• Applicant’s monthly income should be more than Rs 17,000.
• If an enterprise is taking Mudra loan, then its annual turnover should be Rs 15 lakh.
• If a person is taking Mudra loan for doing business, then he should have worked for at least two years. It is necessary for the businessman that he should be doing business for the last five years.
•  The applicant who took the Mudra loan on the proof given for residence should be living for one year.
•  If the address of residence is less than this, then the applicant must have had a relationship with the bank for at least one year.
• It is also necessary for the applicant that he should not be a defaulter of any bank or financial institution.

How to get Mudra Loan?

If any Indian citizen wants to avail benefits under Mudra Loan Scheme, then he has to follow the following procedures.

1. First of all, the person wishing to get the loan will have to go to a nearby bank and contact the bank for Pradhan Mantri Mudra Yojana and get the form of the scheme from them.
2. Then by filling the loan application form, you will have to submit the documents asked for and the detailed description of the business you do or any new business you want to start.
3. After this, all the formalities prescribed by the bank will have to be completed.
4. After completing all the formalities your loan will be sanctioned and made available to you.

Documents required to get Mudra Loan

Applicants desirous of getting Mudra loan will have to submit the following documents along with loan application.

• Self-attested copy of any one of the PAN Card, Aadhar Card, Driving License, Voter ID Card, Passport for identification.
• Self-attested copy of Voter ID Card, Aadhar Card, Passport or Telephone or Electricity Bill for proof of residence.
• Self-attested copy of the certificate if the applicant belongs to SC/ST or Backward Classes.
• Copies of documents relating to the business entity such as license, registration certificate, identity of the proprietor, etc.
• If the applicant applies for a loan of 2 lakhs and above, then he has to submit a copy of his Income Tax Return and Balance Sheet for the last 2 years. It is not mandatory for SHISHU class loan.
• If the applicant wants to start a new business on a large scale or want to expand his existing business then he has to submit the project report related to the business. The technical and economic aspects of the business can be examined from this report.
• The applicant will also have to furnish the details of sales and profit and loss made by his unit during the current financial year.
• If the applicant is a company or partnership firm, then a copy of the relevant deed or memorandum will have to be submitted.
• The applicant has to attach his 2 photographs with the application. (If the applicant is a company or partnership firm, then 2-2 photographs of all its directors or partners have to be attached.)

How much Mudra Loan you will get?

Under the Mudra loan scheme, borrowers are classified into three categories. The basis of this classification is the various stages of the business.

In the first stage, those who start the business.

In the second stage, in the medium position are those who seek finance in the form of loans to provide financial strength to the business and

 The third stage are those who start the business. Looking for more capital to raise. To meet the needs of these three classes, Mudra Bank has divided loans into the following three categories.

1. Shishu Loan: Under this category, Mudra loan up to Rs 50,000 can be provided.
2. Kishor Loan: Under this Category,A Mudra loan ranging from 50 thousand to 5 lakh rupeescan be provided.
3. Tarun Loan: Under this category, Mudra loan ranging from Rs 5 lakh to Rs 10 lakh can be provided.

Almost all types of business units, professionals and service sectors are covered to avail benefits under Mudra Loan Scheme. These include small shopkeepers, fruit and vegetable vendors, street vendors, hair cutting salons, beauty parlors, hawkers, cycle-bike-car repairers, transporters, truck operators, machine operators, artisans, craftsmen, painters, food processing units, restaurants. , cooperatives, self-help groups, small and cottage industries etc.

Products under Mudra Loan Schemes

1. currency card
2. investment credit guarantee
3. increase in credit limit
4. Linking of Beneficiaries with Aadhar Database and Jan Dhan Account
5. setting up of credit bureaus
6. Development of institutions like mix market.

Benefits of Mudra Loan Scheme

• The encouragement of small traders will increase, which will lead to economic development of the country.
• new educated youth will get employment and use their skills in right way.
• cottage industries provide employment to more than 12 crore people. So it’s very very important to country’s economy.
• The country’s capital will remain in the country,  and there will be economic development.
• There will be communication of new activities.
• The confidence of small traders will increase, which will create a sense of competition which will be helpful in their progress.
• The development of the country is not done by the development of the rich but by the development of the poor, so the Mudra Loan scheme is an important decision in this direction.
• In the year 2015, the Mudra Loan scheme has been implemented in the country, after the huge tragedy, many schemes have been implemented to stabilize the country.

Mudra Loan offered by SBI

State Bank of India (SBI) is the largest bank in India. This bank is now giving Mudra loan. Just now SBI has given Shishu loan to women running  small scale industries in West Bengal. You can also go to your nearest SBI and get information about this scheme. Taking a Mudra loan from SBI is considered the most difficult because they give loan only after doing complete investigation. So do not forget to take all your documents with you before going to SBI.

Ultimately, it can be said that the Mudra loan scheme is an equal opportunity for the youth, backward classes, scheduled castes, scheduled tribes of the country, through which they can not only prove their worth but also improve their lives as well as the country. Can also make an active contribution to the economic development of It is also being said in relation to this plan that if this plan is successful and penetrates its goal, then it will be established as a success story in front of the world.

As per official site of MUDRA   since the scheme has started,  each financial year approximately 5 crores Mudra Loan are being sanctioned under this scheme.

District industries center (DIC) also run various loan scheme for existing  and potential entrepreneur, if you are confused that how you can get a loan for shop, then this article on shop loan may be helpful for you.

Question/Answer on MUDRA Loan