Pradhan Mantri MUDRA Yojana (PMMY) is an Indian Government scheme that started in 2015 to aid micro and small businesses. It offers credit without security through banks, NBFCs, or microfinance institutions, to ensure that entrepreneurs have ample opportunity to expand their business without the heavy collateral weight.
MUDRA stands for Micro Units Development and Refinance Agency Ltd. The scheme disburses loans into three categories- Shishu, Kishore, and Tarun-based on the stage of a business and the nature of funding requirement.
- Shishu – loans up to ₹50,000 for new business or start-ups
- Kishor – loans from ₹50,001 to ₹5 lakh for business growth
- Tarun – loans from ₹5 lakh to ₹10 lakh for business scaling
Loans under PMMY are provided by banks, microfinance institutions (MFIs), or non-banking financial companies (NBFCs). PMMY is executed through the MUDRA (Micro Units Development & Refinance Agency) and enables access to credit without collateral so that micro-entrepreneurs can access finance.
PMMY encourages self-employment, boosts job creation, and strengthens the small business sector, which is a major driver of India’s economic growth.
Objectives of PMMY
The main objectives of PMMY are:
- Supporting small and micro enterprises: The need for financial support for small and micro enterprises, especially from the informal sector, cannot be overemphasised, especially to help them scale and survive.
- Collateral-free loan: Provide loans up to a certain value (₹10 lakhs), and there will be some risks relating to the acceptance of requests, ensuring easy access without the need for collateral for business start-ups.
- Job creation: Supporting ventures that offer self-employment and also jobs for others will contribute to economic development.
- Entrepreneurship among new entrants and women: An encouragement for new entrepreneurs, particularly women, would be a great way to promote business activity and independence.
Eligibility Criteria for Pradhan Mantri MUDRA Yojana (PMMY)
To be eligible to access the benefits of PMMY, applicants have to comply with eligibility requirements. Information is summarized as follows:
| Criteria | Details |
| Who can apply? | Any Indian citizen who is a non-farm, non-corporate small or micro enterprise |
| Eligible on what basis for the loan? | To start a new business, or to grow an existing business in manufacturing, trading, or services |
| Loan categories | Shishu: Up to ₹50,000Kishor: ₹50,001 to ₹5 lakhTarun: ₹5 lakh to ₹10 lakh |
| Collateral applicable | No collateral or security needed |
| Credit history | First-time borrowers and existing business owners can apply |
| Age range | Usually 18–65 years (may vary slightly by lender) |
Who Gets Priority Under PMMY?
PMMY is available to all eligible applicants for the PMMY, but some categories of entrepreneurs will be given prioritized consideration from lenders, especially as a part of government and financial inclusion initiatives. Such categories include:
| Priority Category | Eligible in the case of |
| Women entrepreneurs | Business owned by women or women being the primary loan applicants |
| SC/ST entrepreneurs | Should be from the Scheduled Caste or Scheduled Tribe |
| Minority community entrepreneurs | Should belong to notified minority communities under government criteria |
| Youths & first-time borrowers | Should be applying for a business loan for the first time |
| Differently-abled entrepreneurs | Have a 40% or greater disability |
| Small businesses in rural/under-served areas | Have limited banking access in general |
| Existing PMMY borrowers with a positive repayment record | Have taken a MUDRA loan before and repaid successfully |
Not Eligible: For large corporations, farm activities (except allied farm sectors – dairy, poultry, fishery), and any business which does not satisfy the criteria of a micro/micro enterprise (PMMY).
How to Apply for Pradhan Mantri MUDRA Yojana (PMMY)
You have the option to apply for PMMY – offline or online.
Application Procedure – Offline
Step 1: Go to your nearest bank or MFI/NBFC that provides MUDRA loans.
Step 2: Complete the PMMY application form (there are separate forms for Shishu, Kishore, Tarun).
Step 3: Submit required documents.
Step 4: The bank will review your application and sanction the loan.
Application Procedure – Online (through the bank’s website or the Udyami Mitra portal)
Step 1: Go to the Udyami Mitra portal.
Step 2: Select type of PMMY loan (Shishu, Kishore, Tarun).
Step 3: Enter your personal and business details.
Step 4: Upload soft copy of required documents.
Step 5: Submit your application and track it online.
Conclusion
The Pradhan Mantri MUDRA Yojana has proven to be an important initiative to encourage entrepreneurship and support the small business landscape in India. By offering collateral free loans, it has facilitated start ups by first time entrepreneurs, women entrepreneurs and small ventures in both rural and urban areas to secure easy access to financing. Eligible applicants should approach their preferred banks or financial institutions as soon as possible to avail the scheme and escalate the growth of their businesses.
Frequently Asked Questions (FAQ)
PMMY continues to be operational throughout the country through banks, NBFCs and MFIs. Loan advances are being accepted under Shishu, Kishor and Tarun as per the accepted eligibility criteria.
Any Indian citizen who is either running, planning to start a non-farm, non-corporate small or micro business in manufacturing, trading or services can apply, provided they satisfy the lender’s eligibility requirements.
An application may be made online through the branch website of the lender or offline with any participating bank or NBFC or MFI. Basically, you need to carry a filled application form addressing proof, identity proof, proof of business, and bank statement.
Disclaimer:
The information in this article is intended to be generally informative only. Please check official Government Notification or do contact your lender for most accurate and updated details about PMMY
Leave feedback about this