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Your comprehensive guide on the Pradhan Mantri Mudra Yojana Scheme

Introduction to PMMY

The Government of India’s flagship project, the Pradhan Mantri Mudra Yojana (PMMY), offers micro credit/loans of up to Rs. 10 lakhs to facilitate the concept of ‘fund the unfunded’. 

The sectors that can benefit from this yojana are primarily non-farm, including sectors like manufacturing, trading, and services. The Pradhan Mantri Mudra Loan Yojana also provides financial aid to agriculture-related industries such as poultry, dairy, and beekeeping. These loans are provided to all of these sectors through member lending institutions.

These micro and small enterprises include millions of sole proprietorships or partnerships functioning as small-scale manufacturing units, service sector entities, retailers, fruit and vegetable vendors, truck operators, food-service establishments, repair shops, machine operators, small industries, artisans, food processors, and various other such enterprises.

In this blog, we will go through all the important Pradhan Mantri Mudra Yojana details and will cover everything you need to know.

Objective of PMMY

One of the main objectives for launching the Pradhan Mantri Mudra Yojana (PMMY) is – to give micro-credit facilities to micro-enterprises that generate income but are often overlooked by most financial institutions. This scheme offers loans to businesses up to an amount of Rs. 10 lakhs. 

The intention behind this financial support is to fuel the growth of these small-scale businesses and help them expand their operations, be able to hire more staff or invest in any necessary inventory.

With this initiative, the Pradhan Mantri Mudra Loan Yojana is helping individual businesses thrive and also contributing to the economy by promoting entrepreneurship and employment generation. In essence, PMMY is more than a loan scheme; it’s a catalyst for economic growth and empowerment at the grassroots level.

Let’s now take a look at what is the eligibility criteria for this scheme.

Pradhan Mantri Mudra Yojana eligibility

While the Pradhan Mantri Mudra Yojana is formed to be inclusive and accessible, there are some basic criteria that candidates need to fulfil to be eligible for the benefits of this scheme. 

  • The scheme is available only to Indian citizens who have a business framework for a non-farm income-generating activity.
  • This comprises small manufacturing units, shopkeepers, vendors who sell fruits and vegetables, truck drivers, food service, repairing shops, machine operators, small-scale industries, artisans, food processors and others.
  • This scheme is also available to individuals who are already engaged in businesses but need additional funds to expand and scale their businesses. The loans under the PMMY scheme are collateral-free and this serves as a major benefit to entrepreneurs.

This means that borrowers are not required to provide any security or guarantee to avail the loan. This makes the scheme more accessible to those who might not have assets to pledge as collateral.

The Ministry of Finance has created the following eligibility criteria for the Pradhan Mantri Mudra Yojana Scheme, which is published on the official website.

  • Individuals
  • Proprietary concern
  • Partnership Firm
  • Private Ltd. Company
  • Public Company
  • Any other legal forms

In addition to the above criteria, the Pradhan Mantri Mudra Yojana Eligibility comes with the following additional notes.

  1. The candidate should not be a defaulter with any bank or financial institution and should have a satisfactory credit history.
  2. Individual borrowers may be required to have the necessary skills, experience, or knowledge for carrying out the proposed project.
  3. The necessity for educational qualification, if any, is determined by the nature of the proposed activity and the requirements.

The application process for this scheme 

Here is a short and comprehensive guide on how to fill out the Pradhan Mantri Mudra Yojana application form. As an applicant, you need to keep the following documents ready before you start the process of application.

  • Identity Proof
  • Proof of Address
  • Passport size photograph
  • Signature of the Applicant
  • Proof of Identity/Address of the Business Enterprise

Here’s a step-by-step guide to applying for a loan under PMMY:

  1. Go to the PM MUDRA official website and select the Udyamimitra portal.
  2. To initiate the application, click on “Apply Now” under the Mudra loan section.
  3. Identify your entrepreneur status and choose whether you are a new entrepreneur, an existing entrepreneur, or a self-employed professional.
  4. Register your details by entering your name, email, and mobile number, then generate an OTP.

After successful registration:

  1. Provide personal and professional details and fill in the required fields.
  2. If you need help preparing project proposals, select a hand-holding agency. Otherwise, proceed to the “Loan Application Center”.
  3. Select your loan category and choose between Mudra Shishu, Mudra Kishore, or Mudra Tarun, based on your requirements.
  4. Enter business information by providing details about your business, including the name, activity, and industry type (Manufacturing, Service, Trading, or activities allied to agriculture).
  5. Provide additional information and fill in details about the owner, existing banking/credit facilities, proposed credit facilities, future estimates, and your preferred lender.
  6. Attach and upload all necessary documents, including ID proof, address proof, applicant photo, applicant signature, and proof of identity/address of the business enterprise.
  7. Submit the application, after which an application number will be generated. Keep this number for future reference.

Loan categories of PMMY

The Pradhan Mantri Mudra Yojana Scheme (PMMY) classifies loans into three categories based on the stage of growth and funding needs of the beneficiary micro unit. These are:

  • Shishu: This category is for entrepreneurs who are just starting their business. Under this category, the loan amount can extend up to Rs. 50,000.
  • Kishore: This category is for those businesses that have already started but require additional funds for expansion. The loan amount for this category ranges from Rs. 50,001 to Rs. 5,00,000.
  • Tarun: This category is for established businesses that need further funds for expansion. The maximum loan amount under this category is Rs. 10,00,000.

Each of these categories has been designed to cater to entrepreneurs at different stages of their business growth. The purpose of these loans can vary widely, from purchasing new machinery or raw materials to expanding the business footprint.

Pradhan Mantri Mudra Yojana interest rate and charges

The Pradhan Mantri Mudra Yojana interest rate varies based on the loan category and the applicant’s credit profile.

  • Shishu: The interest rate ranges from 1% to 12% per annum. The RBI has directed commercial financial institutions providing Mudra refinance to keep the interest rate at MCLR/base rate.
  • Kishore: The scheme caps interest rates for RRBs and SCBs extending the loan at 3.5% over the Mudra refinance rate. Mudra refinancing imposes a cap of 6% for Non-Banking Financial Companies (NBFCs). The loan amount ranges from Rs. 50,000 to Rs. 5 lakh, and the interest rate varies based on the scheme’s guidelines and the applicant’s credit history.
  • Tarun: This loan variant is for those wishing to expand their business. The loan amount ranges from Rs. 5 lakh to Rs. 10 lakh. The interest rates range from 11.15% to 20%, and the lender decides the repayment tenure based on the guidelines and the applicant’s credit history.

Please note that all loans must be repaid along with the interest within the tenure offered by the lender. Always check with the lending institution for the most accurate information.


The Pradhan Mantri Mudra Yojana Scheme is a transformative initiative by the Government of India that empowers small businesses and micro units across India. By providing accessible and affordable credit, it encourages entrepreneurship which further fosters economic growth. Whether you’re starting a new venture or expanding an existing one, PMMY could be the financial support you need to turn your business aspirations into reality.

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Who can apply for Pradhan Mantri Mudra Yojana (PMMY) loans?

The scheme is available to Indian citizens engaged in non-farm income-generating activities. This includes small manufacturing units, shopkeepers, vendors, truck drivers, artisans, and more. Individuals already in business seeking expansion are eligible as well.

What documents are required to apply for a loan under PMMY?

Applicants must submit identity proof, proof of address, passport-size photograph, signature, and proof of identity/address of the business enterprise.

What categories of loans are offered under PMMY and their respective loan amounts?

PMMY offers loans in three categories: Shishu (up to Rs. 50,000), Kishore (Rs. 50,001 to Rs. 5,00,000), and Tarun (up to Rs. 10,00,000).

What are the interest rates for loans under PMMY?

Interest rates vary based on the loan category and the applicant’s credit profile. For Shishu, rates range from 1% to 12% p.a., for Kishore, rates are capped at 3.5% over the Mudra refinance rate, and for Tarun, rates range from 11.15% to 20%.

Is collateral required for loans under PMMY?

No, loans under PMMY are collateral-free, making them accessible to entrepreneurs who might not have assets to pledge as security.

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