November 4, 2016
CMAT- Common Management Admission Test
November 4, 2016

Mudra Bank for Small Business Loan

Objective of the Scheme

A special central microfinance agency – Micro Units Development Refinance Agency (MUDRA) has been created this year with an initial corpus of 20,000 Cr and credit guarantee corpus of 3,000 Cr to provide loan facilities to small businesses in India.

Mudra bank will provide refinancing to all micro-finance institutions that are providing loans to small businesses through Pradhan Mantri Mudra Yojna (PMMY). SC/ST enterprises will be the priority in this program.

It would ensure that proper credit facility to needy entrepreneurs and efficient and accurate recovery methods is followed by the bank on the other, to create and justifiable and balanced credit system.

Products and Schemes

Under the aegis of Pradhan Mantri Mudra Yojana (PMMY), MUDRA has created products / schemes. The interventions have been named ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth to look forward to :

  • Shishu : covering loans upto  50,000/-
  • Kishor : covering loans above  50,000/- and upto  5 lakh
  • Tarun : covering loans above  5 lakh and upto  10 lakh

It would be ensured that more focus is given to Shishu Category Units and then Kishor and Tarun Categories.

Within the framework and overall objective of development and growth of micro enterprises sector under Shishu, Kishor and Tarun, the products being offered by MUDRA are so designed, to meet requirements of different sectors / business activities as well as business / entrepreneur segments.

The funding support from MUDRA are of four types :

  • Micro Credit Scheme (MCS) for loans upto  1 lakh finance through MFIs.
  • Refinance Scheme for Commercial Banks / Regional Rural Banks (RRBs) / Scheduled Co-operative Banks
  • Women Enterprise programme
  • Securitization of loan portfolio

Purpose of MUDRA loan


  • .Mudra loan is extended for a variety of purposes which provide income generation and employment creation. The loans are extended mainly for :


    1. (i)   Business loan for Vendors, Traders, Shopkeepers and other Service Sector activities.
    2. (ii)   Working capital loan through MUDRA Cards.
    3. (iii)   Equipment Finance for Micro Units.


  • (iv)   Transport Vehicle loans.


Application Process

Approach the banks listed in the website and give them detailed description of the business. Fill the MUDRA form.The application form will be easier if you already have an account in the bank.



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