Mudra Loans – “Funding the Unfunded” Start-ups

Start-Guru-India-Startup-Financial Friday Mudra Loan



Everyone is talking about Mudra Bank and its loan schemes nowadays. Not sure what it’s all about? We’ll tell you.

It is an initiative by PM Modi for the economic development of the country. One of the biggest bottlenecks for SME’s in India is the lack of financial support from the formal banking or financial sector.

Finally this issue has been addressed!

MUDRA (Micro Units Development and Refinance Agency) Ltd is a financial body set by up the government to provide finance to micro units or entrepreneurs for their development and refinancing activities.

MUDRA, with a corpus of Rs. 20,000 crores, will offer up to Rs. 10 lakhs to small business units.

Types of Loan given under the MUDRA Scheme:

Under the aegis of Pradhan Mantri MUDRA Yojana (PMMY), MUDRA has already created its initial schemes. The interventions have been named ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth and funding needs of the entrepreneur and also to provide a reference point for the next phase of growth to look forward to.

The financial limits for these schemes are:-

  • Shishu: covering loans up to 50,000/-
  • Kishor: covering loans above 50,000/- and up to 5 lakh
  • Tarun: covering loans above 5 lakh to 10 lakh

Planning on grabbing this opportunity? Here is a list of some banks offering Mudra Loans:

  1. United Bank of India
  2. Union Bank
  3. Vijaya Bank
  4. Allahabad Bank
  5. UCO Bank
  6. Syndicate Bank
  7. Punjab and Sind Bank
  8. Oriental Bank Of Commerce
  9. Indian Overseas bank
  10. Indian Bank
  11. ICICI Bank
  12. IDBI Bank
  13. Dena Bank
  14. Central Bank of India
  15. Canara Bank
  16. Corporation Bank
  17. Bank of Maharashtra
  18. Bank of India
  19. Bank of Baroda
  20. Axis Bank
  21. Andhra Bank
  22. Punjab National Bank
  23. HDFC Bank
  24. State Bank of India

MUDRA is lending to small businesses at a current rate of 7%. The other banks offering rates are as follows:

  • ICICI Bank – 6 %
  • Corporation Bank – 11-11.9%
  • HDFC Bank 11% – 13%
  • PNB – 11%- 12.5%
  • IDBI – 11%

Here’s a list of documents required for the loan as well.

This is definitely a much-needed and helpful step towards easier financing for start-ups in India. Going by the flow of things, Indian entrepreneur can expect the construction of a more conducive start-up environment in the near future as well.

Have any finance related query? Or something you’re unsure about? Tell us what you’d like to know in #FinancialFriday !

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