The Pradhan Mantri MUDRA Yojana (PMMY), popularly known as MUDRA loan is a loan scheme from the Government of India through MUDRA (Micro Units Development & Refinance Agency), a subsidiary of SIDBI. The PMMY loan scheme offers loans up to ₹20 lakhs (increased from 10 lacs to 20 lacs on 23rd July 2024 under new union budget 2024-2025) to micro and small businesses (MSEs) that meet the specific MUDRA loan eligibility criteria. Here’s we take a closer look at a business’s eligibility for MUDRA loan, the documents required, the CIBIL score details, the MUDRA loan interest rates, who is not eligible for MUDRA loan scheme, and the list of banks through which eligible businesses can apply for a PMMY loan.

MUDRA loan eligibility

Introduced by the Prime Minister of India in 2015, the MUDRA loan is open to all non-farm micro and small businesses and non-corporates. It extends loans up to ₹20 lakhs under three categories based on the requirement of credit and the stage of growth of the business borrowing the loan.

One will have to meet all the MUDRA loan eligibility check set by the loan authority to get the desired loan. In the next sections, we take a detailed look at the eligibility requirements for MUDRA loans.

Note: MUDRA loans are collateral-free loans and micro and small businesses do not have to provide any security to avail this loan.

Who is eligible for a MUDRA loan?

MUDRA loan or PMMY loan can be availed by any Indian citizen, aged between 18 years and 65 years, engaged in non-farming income generating activities across manufacturing, services, trading and processing business.

They can approach any MUDRA approved bank, MFI or NBFC for loans up to ₹20 lakhs under the PMMY scheme. Borrowers should however not have been a previous loan defaulter and be creditworthy with a proper loan repayment history.

Who is eligible for MUDRA?

Listed below are the various entities eligible for MUDRA loans.

Citizenship: Must be an Indian citizen

Age of the applicant: The applicant must be aged between 18 years and 65 years, that is, PMMY loan eligibility does not include minors

Credit requirement: Any applicant with loan/credit requirements of up to ₹20 lakhs is eligible to apply for MUDRA loan

Previous loan history: To meet MUDRA eligibility criteria, the applicant must not be a previous loan defaulter (i.e., no loan default history) with any bank/NBFC and must have a credible loan repayment record

Business entity size: MUDRA loan is open to all micro and small businesses across manufacturing, services, trading and processing, with a valid MSME registration certificate. These may include:

• Sole proprietorship
• Partnerships and LLPs
• Private and Public Limited Companies
• NGOs, Trusts, and Co-operative societies

Business entity type: All MSMEs in the non-farming and non-corporate sector (including startups, wholesalers and retailers) are eligible for PMMY loans. Examples of some business activities and entities that meet MUDRA loan eligibility requirements are:

• Artisans
• Shopkeepers
• Fruit and vegetable vendors
• Engineering businesses
• Businesses in services and manufacturing sector
• Startups and entrepreneurs (within MSME sector) and women entrepreneurs

What is MUDRA loan eligibility age limit?

All Indian citizens, aged between 18 years and 65 years are eligible to apply for PMMY MUDRA loans. Minors or those below 18 years of age, cannot apply for MUDRA loan.

What is the maximum loan in MUDRA?

A business meeting all the Pradhan Mantri MUDRA Yojaya eligibility can apply for a loan up to ₹20 lakhs.

Based on their requirement and stage of business growth, they can apply for loans under the 3 categories, namely:

• Shishu: Loans up to ₹50,000
• Kishor: Loans between ₹50,000 and up to ₹5 lakhs
• Tarun: Loans between ₹5 lakhs and ₹20 lakhs

Is CIBIL score required for a MUDRA loan?

CIBIL score is not required for MUDRA loan. This is because the scheme was launched to help small businesses avail credit facility to start/grow their business. Hence, CIBIL score details are not mandatory, though a good CIBIL score will increase chances of the loan getting approved faster.

In general, an applicant’s credit score or CIBIL score is required when applying for business loans or any other type of loan. This is a way to check the creditworthiness of the borrower and reduce the risks of default/non-repayment.

Also read: Benefits of high CIBIL score and why it’s important

What is the minimum CIBIL score for MUDRA loan?

MUDRA loan eligibility CIBIL score: 650+

Though banks do not consider CIBIL score as essential for MUDRA loan, a minimum CIBIL score of 650 to 700 is recommended.

What documents are required for a MUDRA loan?

There are some MUDRA loan eligibility documents you will need when you apply for the loan:

• MSME Udyam registration certificate
• Shops and Establishment registration certificate
• Identity proof documents – Aadhaar and PAN card
• Age proof and address proof
• Income Tax Returns of the last 6 months to 24 months
• Audited balance sheets and profit/loss statement of the business
• MUDRA loan application form duly filled in (for Sishu category this is a one-page form; for Kishor and Tarun categories this is a three-page form)
• Passport size photographs

Is ITR compulsory for a MUDRA loan?

ITR is an important document and required to for MUDRA loan eligibility check. In general, a minimum of 6 months to 2 years ITR returns is required as proof.

This is however at the discretion of the lending institution and varies based on the loan amount being applied for, the type of business and business vintage.

ITRs enable MUDRA approved banks/NBFCs to determine your income and financial health and evaluate if you are eligible for the loan amount applied for.

Note: Lending terms are governed by RBI guidelines and the specific policies of the lending institutions.

How to get MUDRA loan without income proof?

In general, ITR documents are not required for small value MUDRA loans (i.e., up to ₹50,000).

However, lending institutions based on their internal policies and loan requirements, can request for specific documents if the borrower does not have income proof.

How to get a MUDRA loan easily?

It must be kept in mind that MUDRA does not provide PMMY loan directly to individuals and businesses. An applicant will have to visit any of the approved MUDRA loan banks to avail the loan if eligible.

• Offline application for PMMY loan: Visit any of the approved banks (i.e., Public Sector Banks, Regional Rural Banks, Small Finance Banks, MFIs, NBFCs), fill in the application form and apply for MUDRA loans up to ₹20 lakhs as per your eligibility
• Online application for PMMY loan: Visit UdyamiMitra official website, register on the portal and apply for MUDRA loans online (//udyamimitra.in/page/mudra-loans); Visit JanSamarth portal for more information and online application (//www.jansamarth.in/business-loan-pradhan-mantri-mudra-yojana-scheme)

Note: There are no agents engaged by MUDRA for facilitating Pradhan Mantri MUDRA Yojana applications.

Types of loans extended under MUDRA loans

Which bank gives a MUDRA loan easily?

Under the PMMY scheme, various financial institutions have been authorised to extend loans to MSMEs. Products like SBI e-Mudra loan have become very popular among businesses that are SBI account holders.

Below is a list of MUDRA loan eligible banks and NBFCs where you can apply for a loan:

Author: Sohini Banerjee

Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.