Pradhan Mantri Mudra Yojana: A wonderful way to fulfill your dreams
PM Mudra yojana, a Scheme that has been a game-changer for small businessmen, entrepreneurs, and those who dream of starting their own business – Mudra Yojana. This is a government initiative that gives you loans without any collateral and hassle, so that you can start or expand your business. From small shopkeepers to startups, this scheme is for anyone who wants to stand on their own feet. So let’s understand about it in detail – what is Mudra Yojana, how does it work, what are its benefits, and how can you take advantage of it?
What is Mudra Yojana?
Mudra Yojana, or officially Pradhan Mantri Mudra Yojana (PMMY), is a scheme which was launched by Prime Minister Narendra Modi on April 8, 2015. Its full form is Micro Units Development and Refinance Agency. This scheme has been created to provide financial support to small and micro businesses, which often cannot take loans from banks because they do not have collateral (security) or big paperwork.
Under Mudra Yojana, you get loans in 3 categories – Shishu, Kishore, and Tarun – and the loan can be from Rs 50,000 to Rs 10 lakh. This scheme is especially for people who work in non-corporate, non-farm small/micro enterprises – like shopkeepers, hawkers, artisans, small manufacturers, or service providers.
Objectives of Mudra Yojana
There are crores of people in India who do small-scale business – residents, vegetable vendors, tailors, mechanics, or beauty parlor owners. But their problem is that they do not get loans from traditional banks. Banks prefer big businessmen who have property or assets for mortgage. The idea behind Mudra Yojana was to provide financial help to these small entrepreneurs so that they can expand their business and contribute to the country’s economy.
The government’s target is that this scheme generates employment, reduces poverty, and promotes self-reliance. PM Modi said, “Mudra Yojana is a way to fulfill the big dreams of small people.” So, in a way, it is a supporting pillar of “Make in India” and “Startup India”.
3 Categories of Mudra Yojana
There are 3 types of loans in Mudra Yojana, depending on the size and need of your business:
Shishu Loan:
Amount: up to Rs 50,000.
This is for beginners – if you are just starting your own business, like opening a small shop or setting up a business.
Example: A chai wala who wants to buy equipment for his stall.
Kishore Loan:
Amount: Rs 50,001 to Rs 5 lakh.
This is for those who are slightly established but want to grow their business.
Example: A tailor who wants to buy an extra machine or a bigger shop.
Tarun Loan:
Amount: Rs 5,00,001 to Rs 10 lakh.
This is for large micro businesses who want to expand.
Example: A small manufacturer who wants to increase production capacity.
These loan amounts are flexible, and you can apply as per your need.
How does Mudra Yojana work?
Under Mudra Yojana, the government does not give loans directly. This work is done through banks, Non-Banking Financial Companies (NBFCs), Microfinance Institutions (MFIs), and Regional Rural Banks (RRBs). MUDRA is an agency that refinances these institutions, meaning it gives them money so that they can give you a loan.
One special thing – Mudra Loan does not require collateral. This is an unsecured loan, which is backed through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). So if you default, the government covers a little risk, which also gives banks confidence in giving you money.
Who is Eligible for Mudra Yojana?
The eligibility criteria for Mudra Loan is quite simple:
You should be an Indian citizen.
Your business should be a non-corporate, non-farm micro/small enterprise – like manufacturing, trading, or services (shop, workshop, fruit vendor, etc.).
Age limit is mostly between 18-65 years (depends on the bank).
You should have a business plan or idea – no formal document, you just have to tell where you will use the money.
Small shopkeepers, artisans, women entrepreneurs, and SC/ST/OBC categories are given priority.
Mudra Loan Application Process
Now the question is – how will I get Mudra Loan? The process is pretty straightforward:
Choose a bank or institution:
Go to State Bank of India (SBI), Punjab National Bank (PNB), ICICI, HDFC, or any local RRB/NBFC/MFI. Every bank has a Mudra Loan scheme.
Documents required
Aadhaar Card, PAN Card (ID proof).
Address proof (electricity bill, ration card).
Business proof (shop license, GST registration, or any other small document that shows you are running a business).
Passport size photos.
Bank account details (which will show the loan amount).
Business plan (written in simple words – optional).
Fill the form:
Get the Mudra Loan application form from the bank or download it online. Fill in your details, loan amount, and business idea.
Submit and Verification:
Submit the form and documents to the bank. The bank will check your background – credit history, business viability, etc. If everything is fine, the loan will be approved.
Loan Disbursement:
After approval, the money comes to your account within 7-15 days, depending on the bank.
Mudra Card:
Along with the loan, you also get a Mudra Card (like a debit card), through which you can withdraw money for business expenses.
Interest Rate and Repayment
The interest rate of Mudra Loan depends on the bank, but usually it is between 8% to 12% per annum. The rate is low for small loans (infants) and a little higher for big loans (youngsters). Repayment tenure is 3 to 5 years and EMI is monthly.
Government also provides subsidy in some cases, especially for women and SC/ST entrepreneurs, which reduces the interest load.
Benefits of Mudra Yojana
Now let’s talk about its benefits, because it is important to know:
No Collateral: No property or security is required, which is a big relief for small people.
Easy Access: Paperwork is minimum and loan is available even in rural areas.
Job Creation: By starting your own business, you can generate employment for yourself and others.
Women Empowerment: More than 70% of Mudra Loans have been given to women entrepreneurs – for beauty parlors, tailoring, food stalls.
Financial Inclusion: Unbanked people are also becoming part of the banking system.
Flexible Use: Loan money can be used for machinery, raw material, shop expansion, or working capital
Impact of Mudra Yojana
Mudra Yojana has shown a huge impact since its launch till now (till 2025):
Stats: 40 crore+ loans have been sanctioned, Rs 23 lakh crore+ amount has been disbursed (data till 2023).
Beneficiaries: 68% women, 20% SC/ST/OBC categories people.
Job Growth: Lakhs of micro-businesses started, which created crores of jobs.
Rural Boost: Small shopkeepers, artisans, and hawkers in the village got a new life.
Example: A woman started her pickle business with Shishu Loan, and today she is doing a turnover of Rs 5 lakh with Kishore Loan. There are so many success stories like this!
Challenges and Problems
But this scheme is not perfect, there are some challenges too:
Lack of awareness: People in rural areas do not know about it.
Repayment pressure: It can be difficult for small businessmen to pay EMI if business goes slow.
Bank hesitation: Some banks consider it risky to give small loans, due to which approval gets delayed.
Misuse: In some cases money was taken for personal use, not for business.
NPAs: The rate of Non-Performing Assets (default loans) has increased, which is a tension for banks.
Mudra Yojana Vs Other Loans
To understand Mudra Loan, let’s do a little comparison:
Personal Loan: Collateral required, high interest (12-18%), not for business.
MSME Loan: For big businesses, more paperwork, and collateral mandatory.
Mudra Loan: No collateral, low interest, micro-business focus – it is unique!
How to maximize benefits?
If you want to take Mudra Loan, follow these tips:
Clear Plan: First decide where the money will be used – machinery, stock, or shop.
Talk with local bank: Connect with the bank manager of your area, he will guide you.
Repayment Plan: Make a budget for EMI so that there is no default.
Training: Government or banks provide free training for business skills, take advantage of it.
Success Stories
Ramesh Bhai (Gujarat): A carpenter took a Kishore Loan of Rs 1 lakh, bought new machines, and today has given jobs to 5 people.
Sunita Devi (Bihar): Started a beauty parlor with a child loan of Rs 50,000, now is building a chain by taking a Tarun Loan of Rs 2 lakh.
Amit (UP): Converted a small food stall into a restaurant with Rs 5 lakh, now has a monthly profit of Rs 1 lakh.
Government’s Vision
Mudra Yojana is a part of “Atmanirbhar Bharat”. The government wants that by 2025, there should be an entrepreneur in every household, and this scheme is working in that direction. Banks have been given a target to disburse loans worth Rs 3 lakh crore+ every year.
Conclusion: Make your dreams come true
Friends, Mudra Yojana is a golden opportunity that can turn your dreams into reality. Whether you want to start a small shop or grow your business, this scheme is for you. With no collateral, easy process, and government support, it is a big boost for small people.
So what are you thinking? Go to your nearest bank, ask about Mudra Loan, and start your business. This will not only change your life, but will also empower your family and community. If you liked this blog, share it with your friends, and tell us your plans in the comments. Dream, and fulfill them with Mudra Yojana – happy entrepreneurship!