Pradhan Mantri Mudra Yojana (PMMY)

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PMMY provides collateral-free loans to small entrepreneurs. The scheme helps them start or grow non-farm MSEs with easy loans. Since 2015, it has successfully boosted grassroots economic growth and entrepreneurship.

Highlights

  • Collateral-free loans up to ₹10 lakh and up to ₹20 lakh for repeat borrowers under the Tarun Plus category.
  • Loan is accessible via banks, Non-Banking Financial Companies (NBFCs), Microfinance Institutions (MFIs), and cooperative institutions.
  • Flexible repayment up to 5 years with competitive interest rates.
  • The scheme especially focuses on supporting women, SC/ST, and OBC entrepreneurs.

What is PMMY?

  • This flagship scheme was launched on April 8, 2015, by the Government of India.
  • It offers collateral-free loans to non-corporate, non-farm SMEs.
  • The scheme supports manufacturing, trading, services, and agriculture-related activities.
  • Targets businesses lacking formal credit access to help them grow.

Objectives

  • Facilitate easy loans for new or existing small businesses.
  • Promote self-employment and entrepreneurship.
  • Boost local economic growth by creating new job opportunities.

Benefits of the PMMY Scheme

  • Quick Access to Loans
    Provides collateral-free loans up to ₹10 lakh for small businesses. Repeat borrowers get up to ₹20.
  • No Collateral Required
    Loans are given without the need for security. First-time entrepreneurs can access the funding easily.
  • Inclusive Lending
    Supports women, SC/ST, and OBC entrepreneurs to help them grow their businesses and become financially independent.
  • Supports All Business Stages
    Caters to startups, growing businesses, and established enterprises through different loan categories.

Financial Assistance Under the PMMY Scheme

Categories

Loan Amount

Target Group

Shishu

Up to ₹50,000

Startups and very small businesses

Kishore

₹50,001 to ₹5 lakh

Growing small businesses

Tarun

Above ₹5 lakh and up to ₹10 lakh

Established businesses seeking scale

Tarun Plus*

Above ₹10 lakh and up to ₹20 lakh

Repeat borrowers with a good track record

Interest Rates and Fees

  • Rates differ based on the lender and borrower profile.
  • Minimal or no processing fees for small loans.

Repayment

  • Flexible tenure up to 5 years.

Eligibility for PMMY Loan

You are eligible if:

  • You are an Indian citizen with a practical business plan.
  • You are running a new or existing business.
  • Your business is a non-farm MSE in the manufacturing, trading, or services sector.

You are not eligible if:

  • You are looking to buy agricultural farmland or practice regular farming.
  • Your loan requirement exceeds ₹20 lakh.

Documents Required for PMMY Loan

  • Proof of identity and address such as Aadhaar Card, PAN Card, etc.
  • Proof of business address and existence
  • Business plan or proposal
  • Recent passport-sized photographs

Application Process for PMMY Loan

You can apply:

  • Online on the PMMY portal.
  • Offline by visiting the participating bank/ Microfinance Institutions (MFI)/ Non-Banking Financial Companies (NBFCs) branch.

Examples of Where PMMY Loan Can be Used

  • Toy and gift shops for local customers.
  • Auto rickshaw services for affordable transport.
  • Herbal, steel, and broom manufacturing units
  • Fertilizer and pesticide trading businesses
  • Tailoring and salon services
  • Mobile and mechanic repair shops
  • Tea stalls and small eateries catering to local taste

Frequently Asked Questions

1. What is the Pradhan Mantri Mudra Yojana interest rate?

The Pradhan Mantri Mudra Yojana (PMMY) interest rate is not fixed and varies by bank, applicant profile, and loan amount. Generally, interest rates are competitive and set as per RBI guidelines. You should check with your chosen bank for the current Mudra loan interest rate before applying.

2. Are there any restrictions on the type of business eligible for a Mudra loan?

Most non-farm, non-corporate micro and small businesses are eligible, but activities related to agriculture or those prohibited by law are generally not covered under PMMY.

3. Can existing businesses upgrade their loan category under PMMY as they grow?

Yes, as your business expands, you can apply for a higher loan category (from Shishu to Kishor or Tarun) by meeting the lender’s eligibility and documentation requirements.

Pradhan Mantri Mudra Yojana (PMMY) - Collateral-Free Loans