MUDRA Loan Key Features And Benefits
The MUDRA Yojana is a scheme under which the small businesses would get loans to back up their business and establish themselves. The loans given under this scheme are known as MUDRA loans. They are provided by various private and public financial institutions.
Key features of MUDRA Loan
- Loan: First of all you can get loan up to Rs. 50,000 under Shishu band. From Rs. 50,001 to Rs. 5 lakh the loan will go under Kishore loan and a loan amount from Rs. 5, 00,001 to Rs. 10 lakh will be classified as Tarun loan. If you have taken an overdraft of Rs. 5000 then that too will come under the initial loan you have taken. Since 8th April 2015 onwards, all the advances being granted are being classified as MUDRA loans.
- Interest rate: The interest rate will be charged as per the policy that is obtained from the bank. The SCBs, the Cooperative Banks or the RRBs will peg their interest rates from time to time.
- Processing fee: Only Shishu loan does not have any processing fee under this scheme. For the other schemes, there will be a processing fee. The processing fee for other schemes will be charged upfront, following guidelines.
- Security: This is a security or mortgage or collateral free loan. Up to Rs. 10 lakh, the banks will not take any collateral. Since you can avail Rs. 10 lakh under Shishu, Kishore and Tarun categories, you won’t have to pay any collateral for the same.
- Repayment: You can repay the term loan in some installments as and when you have rise and tide in your business. As far as the OD and CC limits are concerned, their renewal depends on annual review of the bank, and as per demand.
- Tenor of assistance: The borrowers will get assistance for a period of 36 months or three years from the time of taking the loan.
- Eligibility: If you are an individual, proprietary concern, a PVT. LTD. Company or a Public Company, or any other legal form of business, you can avail this loan.The applicant should also not be a defaulter of any bank or financial institution. They should have a credible track record. They should also likely possess the necessary experience or skills or knowledge to complete their proposed project. Educational qualification may or may not be required. It is solely dependent on the type of project you have proposed to undertake.
- Nature of assistance: The MUDRA loans shall be given to the small business enterprises for manufacturing, trading or processing their goods. It is strictly not for personal consumption. Upon seeing the nature of the project, the institutions shall decide upon a project cost. This cost shall be loaned to you. It can also be loaned in the form of a MUDRA card. The MUDRA card is a form of debit card which you can get from the RuPay platform.
- Availability of loan: All the major bank branches across the country including banks like SBI, HDFC and ICICI will give this loan. It shall also be issued by the MFIs and the NBFCs.
- Aim of scheme: This scheme will encourage the youth to become first generation of entrepreneurs. It will also push the existing small businesses to expand their activities. Also, most SC/STs and OBCs obtain loans from sources other than formal banking systems and they also use limited owned funds for the scheme. This will give them a centralized resource and will bring them under one umbrella.
This scheme is a positive step taken towards funding the small and medium business units. This scheme was launched on 8th April, 2015. Hon’ble Finance minister Mr. Arun Jaitley launched this scheme during the budget taking place on February 28th 2015. It will address the issue of credit deprivation in small business sectors.