The Pradhan Mantri Mudra Yojana (PMMY) has helpd over 57.79 crore loans worth ₹40.07 lakh crore to micro and small enterprises across India since its launch in 2015. This government-backed scheme aims to meet 30% of India’s small business credit demand, providing collateral-free funding up to ₹20 lakh for non-corporate, non-farm ventures.
| Parameter | Details |
|---|---|
| Scheme Name | Pradhan Mantri Mudra Yojana (PMMY) |
| Launch Date | April 8, 2015 |
| Objective | Provide collateral-free loans to non-corporate, non-farm micro and small enterprises for income-generating activities |
| Maximum Loan Amount | Up to ₹20 lakh (increased from ₹10 lakh in Union Budget 2024) |
| Loan Categories | Shishu (up to ₹50,000), Kishor (₹50,001 to ₹5 lakh), Tarun (₹5 lakh to ₹10 lakh), Tarun Plus (₹10 lakh to ₹20 lakh for repeat borrowers) |
| Lending Institutions | Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Micro Finance Institutions (MFIs), Non-Banking Financial Companies (NBFCs) |
| Collateral Requirement | Collateral-free for loans up to ₹20 lakh |
| Interest Rates | Typically 9% to 24% per annum (decided by lending institutions based on RBI guidelines and borrower profile) |
| Relief to Shishu Borrowers (2026) | ₹1,500 crore (under Atmanirbhar Abhiyan) |
| Interest Subsidy to Shishu Borrowers (2026) | ₹1,500 crore (2% discount for one year by Government of India) |
| Total Loans Disbursed (since 2015, as of 2026) | 57.79 crore loans, totaling ₹40.07 lakh crore |
| Credit Guarantee | Loans covered under Credit Guarantee Fund for Micro Units (CGFMU) for eligible micro-loans sanctioned since April 8, 2015 |
The scheme’s expansion, including the new Tarun Plus category for loans up to ₹20 lakh, reflects the government’s ongoing commitment to building entrepreneurship and supporting small businesses in India.
Mudra Loan Categories: Shishu, Kishor, Tarun & Tarun Plus
The Pradhan Mantri Mudra Yojana (PMMY) offers four distinct loan categories: Shishu, Kishor, Tarun, and Tarun Plus, designed to support businesses at various growth stages. These categories provide collateral-free loans ranging from up to ₹50,000 for new ventures to ₹20 lakh for established enterprises seeking significant expansion.
| Category | Loan Amount (₹) | Target Business Stage |
|---|---|---|
| Shishu | Up to ₹50,000 | New businesses, start-ups, or early-stage ventures needing initial capital for launch or raw materials. |
| Kishor | Above ₹50,000 and up to ₹5 lakh | Established businesses that have completed their initial setup and require funds for expansion or scaling operations. |
| Tarun | Above ₹5 lakh and up to ₹10 lakh | Well-established businesses needing substantial capital for significant expansion, technological upgrades, or diversification. |
| Tarun Plus | Above ₹10 lakh and up to ₹20 lakh | Businesses that have successfully repaid existing Tarun loans and require further capital for advanced scaling or larger projects. |
The ‘Tarun Plus’ category was introduced in October 2024 by the Department of Financial Services to further boost entrepreneurship, extending the maximum loan limit to ₹20 lakh for eligible borrowers.
Mudra Loan Eligibility Criteria 2026
The Pradhan Mantri Mudra Yojana (PMMY) supports non-corporate, non-farm micro and small enterprises with credit needs up to ₹20 lakh. To qualify for a Mudra loan in 2026, applicants must be Indian citizens operating or planning an income-generating business activity.
The eligibility criteria ensure that financial assistance reaches genuine micro-entrepreneurs across various sectors.
- Indian Citizenship: The applicant must be an Indian citizen, demonstrating a clear intent to establish or expand a business within India.
- Business Type: Loans are exclusively for non-corporate, non-farm micro and small enterprises, including manufacturing, trading, and service sectors.
- Income-Generating Activity: The business must engage in an income-generating activity, ensuring the loan supports viable economic ventures.
- Loan Requirement: The total credit need should not exceed ₹20 lakh, covering all categories from Shishu to Tarun Plus.
- No Default History: Applicants should not have any prior default records with any financial institution.
- Lender-Specific Norms: While PMMY sets broad guidelines, individual banks, NBFCs, and MFIs may have additional internal eligibility criteria.
- Business Plan: A clear and viable business plan is often required by lenders to assess the feasibility and repayment capacity of the proposed venture.
Lenders scrutinize business requirements to determine the final interest rate and loan approval, with no credit score verification by banks or NBFCs as a primary criterion for Mudra loans.
Mudra Loan Interest Rates 2026 by Lender
Mudra loan interest rates for 2026 typically range from 9% to 24% per annum, determined by individual lenders within RBI’s regulatory framework. Public sector banks generally offer rates between 9% and 12% p.a., while NBFCs and MFIs may charge higher rates for quicker processing and flexible eligibility.
The specific rate depends on the loan category (Shishu, Kishor, Tarun), the borrower’s credit profile, and prevailing market conditions. MUDRA itself provides a 25 basis points interest rate reduction to MFIs/NBFCs lending to women entrepreneurs.
| Lender Type | Typical Interest Rate Range (p.a.) | Key Factors Influencing Rate |
|---|---|---|
| Public Sector Banks | 9% to 12% | Internal policies, RBI guidelines, borrower’s risk profile, MCLR/RLLR/EBLR, priority lending obligations |
| Private Sector Banks | 10% to 14% | Internal policies, RBI guidelines, borrower’s credit score, business viability, loan category |
| Regional Rural Banks (RRBs) | 9.5% to 13% | Focus on rural and semi-urban areas, RBI guidelines, borrower’s profile, local market conditions |
| Small Finance Banks (SFBs) | 10% to 15% | Targeting underserved segments, RBI guidelines, borrower’s credit history, business type |
| NBFCs (Non-Banking Financial Companies) | 10% to 15% or higher | Quicker processing, more flexible eligibility norms, internal policies, RBI guidelines, borrower’s risk profile, up to 6% above Mudra refinance rate |
| MFIs (Microfinance Institutions) | 12% to 24% | Quicker processing, more flexible eligibility norms, internal policies, RBI guidelines, borrower’s risk profile, margin CAP (10% for loan portfolio > ₹100 crore, 12% for < ₹100 crore), up to 6% above Mudra refinance rate |
| Mudra Shishu Category | 10% to 12% | Most concessional rates, government benefits under Atmanirbhar Abhiyan, 2% interest discount for fast recipients |
| Mudra Kishor Category | 11% to 15% | Rates for established businesses needing expansion, lender’s assessment of business growth potential |
| Mudra Tarun Category | 12% to 16% | Higher rates for larger loan amounts, lender’s assessment of business stability and repayment capacity |
| Mudra Tarun Plus Category | 12.5% to 17% | Introduced in October 2024 for repeat borrowers, rates reflect larger loan size and established business history |
While MUDRA does not prescribe a uniform interest rate, each lending institution sets its own pricing within the RBI’s regulatory framework, considering various factors including the borrower’s creditworthiness and the specific loan category.
How to Apply for Mudra Loan Online & Offline
Applying for a Mudra Loan in 2026 involves both online and offline channels, primarily through banks, NBFCs, and MFIs. The Pradhan Mantri Mudra Yojana (PMMY) aims to provide collateral-free business loans up to ₹20 lakh to micro and small enterprises.
The application process is designed for accessibility, with an emphasis on a viable business plan and proper documentation.
- Online Application via Udyamimitra Portal: The primary online channel for Mudra Loan applications is the Udyamimitra portal (www.udyamimitra.in). This portal helps direct applications to various lending institutions.
- Offline Application at Lender Branches: Applicants can visit branches of public sector banks, private sector banks, NBFCs, Small Finance Banks (SFBs), Regional Rural Banks (RRBs), and Micro Finance Institutions (MFIs).
- Required Documents Submission: documents include identity proof, address proof, business existence proof, and income proof. For Kishor loans, specific forms and SC/ST/Minority status proof (if applicable) are also needed.
- Business Plan Scrutiny: Lenders scrutinize the applicant’s business requirements and viability. A well-prepared business plan for a non-farm income-generating activity is for approval.
- No Credit Score Verification by Banks: Unlike traditional loans, Mudra Loans do not typically require a credit score verification by banks or NBFCs as a primary selection criterion.
- Loan Approval Timeline: After submitting all required documents and a viable business plan, loan approval typically takes 7-10 working days.
- Mudra Card Issuance: For the working capital portion of the loan, a RuPay debit card (Mudra Card) may be issued, allowing for multiple withdrawals and efficient credit management.
- No Processing Fees for Shishu Loans: Shishu category loans (up to ₹50,000) generally have no processing fees. Kishore and Tarun loans may incur 0% to 0.50% plus applicable taxes.
Successful application hinges on meeting the specific eligibility criteria for each Mudra category and providing full documentation to the chosen lender.
Documents Required for Mudra Loan Application
Applying for a Mudra loan requires specific documents to verify your identity, address, and business viability. Lenders scrutinize these documents to assess your eligibility and repayment capacity for the collateral-free loan.
Ensure all documents are current and valid for a smooth application process, whether applying online via the Udyamimitra portal or offline at a bank branch.
- Identity Proof: Submit a copy of your Aadhaar Card, Voter ID, Passport, Driving License, or PAN Card. This confirms your identity as an Indian citizen, a key eligibility criterion for the scheme.
- Address Proof: Provide documents like your Aadhaar Card, Passport, Utility Bills (electricity, telephone, water), or Bank Account Statement. These verify your residential address for loan processing.
- Business Proof: Include documents such as your Business Registration Certificate, Udyam Registration Certificate, or any other license/Certificate related to your business activity. This establishes the existence and nature of your non-farm enterprise.
- Income Proof: For Kishore and Tarun categories, lenders may request income tax returns (ITR) for the last two years or bank statements for the past six months. This helps assess your business’s financial health and repayment ability.
- Bank Account Statements: Submit bank statements for the last 6-12 months for both personal and business accounts. This provides insight into your financial transactions and cash flow.
- Quotation for Machinery/Equipment: If the loan is for purchasing new machinery or equipment, provide a quotation from the supplier. This justifies the loan amount requested for business assets.
- Category Proof (if applicable): If you belong to SC/ST/Minority categories, provide the relevant Certificate. This may qualify you for specific benefits or interest rate reductions offered by some lenders.
Having all necessary documents prepared in advance can significantly expedite the Mudra loan application and approval process.
Mudra Loan Vs. Traditional Business Loans
The Mudra Loan Scheme, launched in 2015, provides collateral-free business loans up to ₹20 lakh, primarily targeting micro and small enterprises in non-farm sectors. In contrast, traditional business loans cater to a broader range of businesses, often requiring collateral for larger amounts.
| Feature | Mudra Loan | Traditional Business Loan |
|---|---|---|
| Purpose | Financial support for non-corporate, non-farm micro and small enterprises for income-generating activities. | General business expansion, working capital, asset purchase, etc., for various business sizes. |
| Collateral Requirement | Collateral-free for loans up to ₹10 lakh (and up to ₹20 lakh for Tarun Plus category). | Often requires collateral or security, especially for larger loan amounts. |
| Loan Amount | Up to ₹10 lakh (Shishu: up to ₹50,000; Kishor: ₹50,001 to ₹5 lakh; Tarun: ₹5 lakh to ₹10 lakh). Tarun Plus up to ₹20 lakh (introduced October 2024). | Can range from small amounts to several crores, depending on the lender and business size. |
| Interest Rates | Typically ranges from 9% to 24% per annum (as of 2026), decided by individual lenders within RBI framework. Generally lower for small businesses. | Varies widely based on lender, borrower’s creditworthiness, loan type, and market conditions. Can be higher for unsecured loans. |
| Target Beneficiaries | Micro and small entrepreneurs, startups, self-employed individuals, traders, manufacturers, and service providers in non-farm sectors. | Businesses of all sizes, from small to large corporations, depending on the loan product. |
| Processing Fees | Nil to nominal (0% to 0.50% plus taxes for Kishore and Tarun loans; often nil for Shishu loans). | Can vary, often a percentage of the loan amount, and may include other charges. |
| Application Process | Online via Udyamimitra portal or offline at lender branches; focuses on business plan and activity. | Typically involves detailed financial statements, business plans, and credit history checks. |
| Regulatory Framework | Government-backed scheme (PMMY) managed by MUDRA Ltd., with RBI guidelines for lenders. | Regulated by RBI, but specific terms are set by individual banks/NBFCs without a government scheme framework. |
Mudra loans are specifically designed to build entrepreneurship among micro-units, offering easier access to credit compared to the more stringent requirements of traditional business loans.
Common Reasons for Mudra Loan Rejection
Mudra loan applications can be rejected for various reasons, often related to eligibility or incomplete documentation. Lenders scrutinize business requirements and borrower profiles before approval. Understanding these common pitfalls helps applicants prepare better for the 2026 application cycle.
- Incomplete or Incorrect Documentation: Missing documents like identity proof, address proof, business existence proof, or an improperly filled application form are frequent causes for rejection.
- Poor Credit History: While Mudra loans are collateral-free, lenders still assess the borrower’s creditworthiness. A history of loan defaults or a low CIBIL score can lead to rejection.
- Ineligible Business Activity: Mudra loans are specifically for non-farm, income-generating micro and small enterprises in manufacturing, processing, trading, or service sectors. Farm income-generating activities are generally ineligible.
- Lack of a Viable Business Plan: Lenders require a clear, viable business plan demonstrating the project’s feasibility and repayment capacity. An unclear or unconvincing plan can result in rejection.
- Exceeding Loan Limits: Applying for an amount higher than the maximum limit for a specific Mudra category (e.g., over ₹50,000 for Shishu or ₹10 lakh for Tarun) will lead to rejection. The overall maximum loan amount is ₹20 lakh.
- Age or Residency Criteria Not Met: Applicants must be Indian citizens aged between 18 and 65 years. Failing to meet these basic demographic requirements will disqualify an application.
Applicants should ensure all eligibility criteria are met and submit a thorough application to improve their chances of Mudra loan approval.
Mudra Loan Benefits & Advantages for MSMEs
The Pradhan Mantri Mudra Yojana (PMMY) provides collateral-free business loans, significantly boosting entrepreneurship in India’s non-corporate small business sector. Since its launch in April 2015, the scheme has disbursed 57.79 crore loans totaling ₹40.07 lakh crore by 2026, supporting micro and small enterprises.
- Collateral-Free Funding: Mudra loans up to ₹10 lakh do not require collateral, making IT easier for small businesses and new ventures to access credit. This reduces the financial burden on entrepreneurs.
- Low Processing Fees: Shishu category loans have no processing fees, while Kishor and Tarun loans typically charge 0% to 0.50% plus applicable taxes. This keeps initial costs minimal for borrowers.
- Targeted Categories: The scheme offers Shishu (up to ₹50,000), Kishor (₹50,001 to ₹5 lakh), Tarun (₹5 lakh to ₹10 lakh), and Tarun Plus (₹10 lakh to ₹20 lakh) loans, catering to different stages of business growth. The Tarun Plus category was introduced in October 2024 by the Department of Financial Services.
- Interest Rate Concessions: MUDRA Ltd. Offers a 25 basis points (0.25%) reduction in its interest rates to Micro Finance Institutions (MFIs) and Non-Banking Financial Companies (NBFCs) that provide loans to women entrepreneurs.
- Credit Guarantee Coverage: All eligible micro-loans sanctioned under PMMY since April 8, 2015, are covered by the Credit Guarantee Fund for Micro Units (CGFMU), managed by National Credit Guarantee Trustee Company Ltd. This provides comfort to lending institutions.
- Employment Generation: The MSME sector, significantly supported by Mudra loans, contributes almost 30% to India’s GDP and employs around 110 million people, building economic growth and job creation.
The scheme aims to reduce dependence on high-interest informal lenders and promote formal financial inclusion for micro-enterprises across various sectors.
Key Takeaways
- Mudra loans provide collateral-free funding up to ₹20 lakh, with specific categories (Shishu, Kishor, Tarun, Tarun Plus) tailored to different business needs.
- The scheme has helpd 57.79 crore loans worth ₹40.07 lakh crore by 2026, significantly boosting the MSME sector’s contribution to India’s economy.
- Borrowers benefit from low processing fees, interest rate concessions for women entrepreneurs, and credit guarantee coverage under CGFMU.
Check your eligibility and apply for a Mudra loan online through the Udyamimitra portal (www.udyamimitra.in) or visit a participating bank, NBFC, or MFI branch.
Frequently Asked Questions (FAQs)
What is the Mudra Loan scheme?
The Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme launched on April 8, 2015, by the Government of India. IT provides collateral-free business loans up to ₹20 lakh to non-corporate, non-farm micro and small enterprises. These loans are disbursed through banks, NBFCs, and MFIs to support entrepreneurship.
What are the different types of Mudra Loans?
Mudra Loans are categorized into three types based on the loan amount: Shishu (loans up to ₹50,000), Kishor (loans from ₹50,001 to ₹5 lakh), and Tarun (loans from ₹5 lakh to ₹10 lakh). A new ‘Tarun Plus’ category, announced in the Union Budget 2024, offers loans from ₹10 lakh to ₹20 lakh for entrepreneurs who have successfully repaid existing Tarun loans.
What are the eligibility criteria for a Mudra Loan in 2026?
To be eligible for a Mudra Loan in 2026, applicants must be Indian citizens engaged in non-farm income-generating activities, such as manufacturing, trading, or services. The minimum age is typically 18 years, and the maximum can be up to 65 years, depending on the lending institution. The business must be a micro or small enterprise, and the applicant should not have defaulted on any previous loans.
What are the interest rates for Mudra Loans in 2026?
Mudra Loan interest rates are not fixed and vary by lender, typically ranging from about 9% to 24% p.a. As of early 2026. The final rate depends on the applicant’s business profile, credit score, and the specific bank or NBFC. MUDRA provides a 25 bps interest rate reduction to MFIs/NBFCs that finance women entrepreneurs.
What documents are required to apply for a Mudra Loan?
Key documents for a Mudra Loan application include a completed application form, identity proof (Aadhaar, PAN, Voter ID), address proof (utility bills, Aadhaar), business proof (registration certificates, licenses), and bank statements for the last 6-12 months. Lenders may also request a business plan, income tax returns, and caste certificates for specific categories.
How can I apply for a Mudra Loan online?
You can apply for a Mudra Loan online through the official websites of participating banks (e.g., SBI, HDFC Bank, ICICI Bank) or the Udyamimitra portal. The process typically involves filling out an online application form, uploading required documents, and then potentially visiting a branch for verification. Some lenders also offer digital application processes for faster approval.
Are there any subsidies or special benefits for Mudra Loan borrowers?
Yes, under the Atmanirbhar Abhiyan, Mudra Shishu category borrowers received a 2% interest subsidy for one year, providing relief up to ₹1,500 crore (as per 2025 data). , MUDRA extends a 25 bps interest rate reduction to MFIs/NBFCs that provide loans to women entrepreneurs, encouraging their participation in business.
Disclaimer: This article is general information, not financial advice. Interest rates, fees, and eligibility change frequently. Verify current details with the lender or regulator (RBI / SEBI) before deciding.