What is the Eligibility Criteria for MUDRA Loan?

Mudra Loan has been launched by the Government of India under the Pradhan Mantri Mudra Yojana (PMMY) Scheme. It was launched on April 8, 2015, and aims at providing loans to small, and medium enterprises that are non-farming and non-corporate. If an individual wants to avail of the benefits of a Mudra loan then they must meet the eligibility criteria. They can get a loan upto Rs.10 lakh. Generally, this scheme of the Government is to extend affordable credit to small and micro-enterprises or to” fund the unfunded. In this article, we will be discussing the Mudra loan eligibility criteria. Below is the 3 different products that are offered by MUDRA Scheme: April Month Free Current Affairs Magazine-  DOWNLOAD NOW

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• Shishu: Under this, you can get a loan of up to Rs.50,000 in the early stages of the business.
• Tarun: Under this, you can get a Loan between Rs.5 Lakh to Rs.10 Lakh
• Kishore: Under this, you can get a Loan between Rs.5 Lakh to Rs.10 Lakh.

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MUDRA Loan Eligibility Criteria:

Under the MUDRA Scheme, non-framing micro, non-corporate, small, and medium enterprises in urban and rural India can get the loan. Below are people who are eligible for the loan:

• An Artisan
• A small Manufacturer
• A shopkeeper
• A fruit and vegetable dealer
• An individual who had occupied in Agriculture (Fisheries, Poultry, Livestock units, etc.

The main purpose of the MUDRA Scheme is to help medium and small businesses. A person who is running a business can apply for the MUDRA Loan. All the private, public, and regional banks are eligible for the MUDRA Loans. Below is the lending institution that offers MUDRA Loans:
 

1. Scheduled Commercial Banks:   

Below are the PMMY eligibility criteria for Scheduled Commercial Banks:
 

Public Sector Banks	Foreign Banks/Private Banks
The exposure limit approved on the basis of the exposure framework for banks shall be the eligible limit.

 

2. Regional Rural Banks:

Below are the MUDRA Loan eligibility criteria for the Regional Rural Banks:
 

	Regional Rural Banks
NET Profit	Net profit for preceding 2 years
Level of NPA	Level of Net NPA’s equal to less than 10%
NETWORTH/NOF	Above Rs.50 crore Net Worth
CRAR	CRAR as stipulated by RBI

 

3. Small Finance Banks (SFBs):

Below is the eligibility for a mudra loan from Small Finance Banks:
 

1	Eligible Institution	Small Finance Banks should meet the eligibility criteria given below:
2.		Final License has been granted by the Reserve Bank of India (RBI) for carrying on business as Small Finance Bank and has commenced operations as a Small Financial Bank.
		The SFB/previous entity prior to conversion into SFB (taken together) should have made a profit in the previous two fiscal years. On the merits of each case, the Sanctioning Committee may consider need-based relaxation in respect of SFBs that reported Net Loss during the previous and/or current fiscal year, provided they have a minimum BBB+ rating of long-term instruments.
	Benchmark for Sanction	Long Term External rating of BBB+ and above
		Long term external rating of BBB+ and above.

 

4. Microfinance Institutions (MFIs)

Below is the PMMY eligibility criteria for Microfinance Institutions:

Sr. No.	Eligible Institution	Portfolio (AUM including off balance sheet)
A.	Entity Type	Registered Legal Entity (NBFC-MFI, Society, Trust etc.) To meet the parameters set forth by the RBI from time to time in order to qualify as an NBFC-MFI.
B.	Business Vintage	i)Three years of experience in the Micro Finance industry. ii) In order to consider proposals from such MFIs, which are promoted by experienced and resourceful professionals and/or are backed by established PE funds, a pilot, with an estimated cost of $100,000, will be conducted.
C.	Profitable Track Record	Latest Profitable track record of two years. If losses were reported in FY 2018 as a result of demonetization, then FY 2017 had to be profitable. Note: To be verified using audited financials from the previous two years, with a July 31 cut-off date. If the application is submitted on or before July 31, audited financials for the previous two years and unaudited financials for the most recent year must be reviewed.

 

 
As per the eligibility criteria for a MUDRA loan the applicant should be:
 

Maximum age of eligibility criteria	65 years
Minimum age of Eligibility criteria	18 years
Collateral or Security	No third-party or collateral security is required
Who can avail Mudra Loan	New and existing unit can avail loan
Institutions that are eligible to offer Mudra Loan	Private sector banks, public sector banks, Micro Finance Institutions, and Regional Rural Banks
Documents Required	Proof of residence, Identity proof, passport size photos and application form

 

Advantages of Mudra Loan:

Below are some of the major advantages of the MUDRA Loan:

• Micro-small Businesses and start-ups can obtain financial backing.
• Both rural and urban areas can avail of Financial and Banking services.
• Can take a business loan in small amounts at affordable interest rates.
• Shopkeepers, Food Vendors, and other small business owners can take advantage of this scheme.
• The period of repayment can extend up to 7 years for this scheme

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