Table of Contents
PMMY/ Mudra Yojana Introduction
The MUDRA Yojana aims to bring the “unfunded” into the formal financial system and empower them with access to institutional credit.
Launched: 8 April 2015
Full Form: Micro Units Development and Refinance Agency Yojana
Purpose: To provide financial support to micro and small enterprises that are often excluded from formal banking credit due to lack of collateral and credit history.
Target Group: Non-corporate, non-farm small/micro enterprises in rural and urban areas.
Objective of the Scheme
- To promote entrepreneurship by providing credit to microenterprises, small businesses, and startups.
- To improve financial inclusion by bringing small borrowers into the formal banking system.
- To reduce dependence on informal/unorganized money lenders.
- To generate employment opportunities by supporting income-generating micro-businesses.
Who Can Avail the Loan?
- Small manufacturing units
- Service sector units (beauty parlors, mechanic shops, etc.)
- Food vendors, artisans, tailors, weavers
- Shopkeepers, traders
- Agriculture-allied activities (dairy, poultry, etc.)
- Transport operators (auto/taxi/bus owners)
- Startups and individuals with micro-business ideas
Loan Categories under PMMY
MUDRA loans are classified into three categories, based on the stage of growth and funding needs:
| Category | Loan Amount | Ideal for |
| Shishu | Up to ₹50,000 | Startups, very small businesses |
| Kishor | ₹50,001 – ₹5 lakh | Growing businesses needing moderate capital |
| Tarun | ₹5 lakh – ₹10 lakh | Established businesses requiring expansion |
| Tarun Plus | ₹10 lakh – ₹20 lakh | Introduced recently for further scale-up |
Features of MUDRA Loan
- No collateral required for loans up to ₹10 lakh.
- Interest rate varies by lender and category, typically between 8% – 12%.
- Repayment tenure:
- Shishu/Kishor: up to 5 years
- Tarun: up to 7 years (with moratorium of 3–6 months)
- Credit Guarantee: Under CGFMU (Credit Guarantee Fund for Micro Units)
- Loans offered by:
- Public and private sector banks
- Regional Rural Banks (RRBs)
- Small Finance Banks (SFBs)
- NBFCs and MFIs
Recent Update (FY 2025)
- New Tarun Plus category introduced (₹10L–₹20L) to support expanding MSMEs.
- Digital MUDRA loan application facility made available by several banks.
- Emphasis on women, tribal and minority entrepreneurs.
- Loan portfolios are being linked with GST and digital invoice systems for faster verification.
Comparison Table: Shishu vs Kishor vs Tarun vs Tarun Plus
| Category | Loan Amount | Ideal for | Type of Borrower | Collateral | Repayment Tenure |
| Shishu | Up to ₹50,000 | Beginners, Startups | New entrepreneurs, first-time business owners | ❌ No | Up to 5 years |
| Kishor | ₹50,001 – ₹5 lakh | Growing businesses | Entrepreneurs with some business track record needing working capital or machinery | ❌ No | Up to 5 years |
| Tarun | ₹5 lakh – ₹10 lakh | Expansion stage | Established businesses needing more capital for expansion, inventory, staff, etc. | ❌ No (guaranteed under CGTMSE) | Up to 7 years |
| Tarun Plus | ₹10 lakh – ₹20 lakh | Advanced micro/small businesses | Businesses with good repayment history under PMMY, seeking larger funds to grow faster | May need limited collateral depending on bank | Up to 7 years |
Who Can Avail Which Category?
✅ Shishu (Up to ₹50,000)
Who can apply?
- New businesses/startups
- Street vendors
- Tailors, cobblers, barbers
- Food stall owners
- Small shopkeepers
- Women starting home-based work (papad, pickle, beauty parlors, tailoring)
Purpose: Buying tools, raw material, carts, small machines
✅ Kishor (₹50,001 – ₹5 lakh)
Who can apply?
- Existing small businesses needing extra working capital
- Individuals expanding from home-business to market/shop setup
- People upgrading from manual tools to electric/electronic equipment
Purpose: Purchase of equipment, renovation, working capital, hiring staff
✅ Tarun (₹5 lakh – ₹10 lakh)
Who can apply?
- Well-established small enterprises looking to expand
- Traders, manufacturers with high turnover
- Retail shops, service centers, transport services
- Clinics, tuition centers, catering businesses
Purpose: Opening new branches, expanding operations, buying vehicles or machinery
✅ Tarun Plus (₹10 lakh – ₹20 lakh)
Who can apply?
- Enterprises that have successfully repaid Shishu/Kishor/Tarun loans
- MSMEs with sound financials and GST compliance
- Registered small firms wanting to scale up operations
Purpose: Scaling business to next level, launching new product lines, adding infrastructure.
🔑 Key Notes
- All loans under PMMY up to ₹10 lakh are collateral-free.
- Tarun Plus may require some documentation/collateral as per lender discretion.
- Loans are backed by Credit Guarantee Fund for Micro Units (CGFMU).
- Available to individuals, sole proprietors, partnerships, companies (non-farm, non-corporate only).
Women, SC/ST/OBC, and minorities are strongly encouraged and often prioritized.
Required Documents for Application
If you’re an individual entrepreneur (e.g., shop owner, service provider):
- Completed PMMY/Mudra application form
- 2 passport-size photos
- ID proof (Aadhaar, PAN, Driving Licence)
- Address proof (Aadhaar, utility bill, rent agreement)
- Bank statements for last 6 months
- Business plan/brief profile, including cash flow estimates
For proprietorships or partnerships:
- All of the above, plus:
- Partnership deed & firm PAN
- GST returns, ITRs, audited financials or CA-certified statements for last 1–3 years
- Project report or CMA data
For companies (Pvt Ltd/Public Ltd):
- All of the above, plus:
- MoA/AoA, incorporation certificate, board resolution
- ROC filings, shareholding pattern, director IDs
Step‑by‑Step Application Process
- Prepare documents: Use the checklist above.
- Choose loan tier: Shishu, Kishor, Tarun or Tarun Plus based on funding needs.
- Visit your chosen branch (e.g., Bank of Maharashtra or BOB) or apply online via their Mudra portal https://www.jansamarth.in/home
- Submit business plan, documents, and filled application form.
- Processing: Lender sends application for CGTMSE guarantee (no collateral up to ₹10 lakh).
- Approval & disbursal: Typically within a few weeks, sometimes faster online.
- Start repayment: Via EMIs as agreed (up to 5–7 years tenure).
- MSME FULL FORM, definition, benefits & registration process