Mudra Loan Eligibility Criteria

With a funding of over Rs.1 lakh crore from the RBI, the MUDRA scheme is all set to tackle the financial shortcomings faced by small scale entrepreneurs in the world’s biggest unorganized business environment.

Mudra Loans will lend to non-corporate business undertakings, in order to realise the vision of the new generation of Indians being job creators instead of employees for big firms.

MUDRA handpicks its borrowers after evaluating their requirement and potential. The primary borrower demographics are among, and related to:

Mudra Loan Eligibility 

1.     Small Manufacturing Units.

2.     Shopkeepers.

3.     Fruit and Vegetable Vendors.

4.     Artisans and craftsmen.

5.  Young, educated Indians with a vision for a sustainable business.

6.     Women, with special loan products.

7.     Self Help Groups (SHGs).

8.     Transport agencies.

9.     Repair shops.

10. Barbers.

11. Food processing units.

There are three loan products that MUDRA offers, the successful repayment of each forms the basis for eligibility for the next:

1.   Shishu: This is the first loan product, and under Shishu, loans of up to Rs.50,000 are sanctioned to deserving businesses and entrepreneurs. Start-ups in need of funding are eligible for this loan.

 

2.     Kishore: The second loan product, Kishore, can be applied for on the successful repayment of Shishu, or on submission of sufficient evidence of the applicant’s ability to repay. Loans of up to Rs.5,00,000 are granted under Kishore. Business enterprises that have already performed profit generating operations but need a formal and official set up will be the primary focus of this loan group.

 

3.  Tarun: The third and largest loan offering under the MUDRA scheme, the Tarun loan can be applied for on successfully clearing the Kishore loan, or on submitting acceptable evidence of the applicant’s ability to repay. Loans of up to Rs.10,00,000 can be sanctioned under the Tarun loan category. Established and profitably running businesses are targeted with this loan product, and are given funding to grow.

Under MUDRA, funds are disbursed to lending institutions who then lend to Last Mile Financiers (LMFs) who make funds available to the end user.

Institutions that are eligible to lend MUDRA loans are:

-      Regional Rural Banks.

-      Scheduled Commercial Banks.

-      State Urban Cooperative Banks.

-      Societies and trusts that perform the duties of Micro Finance Institutions.

-      Non-Banking Financial Companies.

-      Approved MFIs.