PM Mudra Yojana (PMMY)
Pradhan Mantri Mudra Yojana gives small business owners collateral-free loans of up to ₹20 lakh through banks, NBFCs and microfinance institutions. It is meant for non-farm micro enterprises: shops, services, small manufacturing, transport and allied farm activities like dairy or poultry.
What is PM Mudra Yojana?
PMMY was launched on 8 April 2015 with the aim of "funding the unfunded": giving bank credit to small entrepreneurs who often lack collateral or formal records. MUDRA (Micro Units Development and Refinance Agency Ltd.) does not lend directly. It supports the banks and institutions that give the loans. As of March 2026, more than 57 crore loans worth over ₹40 lakh crore have been given, and about 60% of loan accounts belong to women.
Loan categories
| Category | Loan amount | Meant for |
|---|---|---|
| Shishu | Up to ₹50,000 | Starting a new or very small business |
| Kishor | ₹50,000 – ₹5 lakh | New or running businesses needing working capital or modest expansion |
| Tarun | ₹5 lakh – ₹10 lakh | Growing businesses buying equipment or scaling up |
| Tarun Plus | ₹10 lakh – ₹20 lakh | Borrowers who have taken and fully repaid a Tarun loan |
What can the loan be used for?
- Business loans for vendors, traders, shopkeepers and service activities.
- Working capital, including through a MUDRA card.
- Buying machinery and equipment for micro units.
- Commercial transport vehicles such as auto-rickshaws, e-rickshaws and small goods vehicles.
- Allied agriculture activities like dairy, poultry, fishery, bee-keeping, livestock rearing and food processing.
Crop loans and personal loans are not covered under Mudra.
Who can apply?
Any Indian citizen with a business plan for an income-generating, non-farm activity in manufacturing, trading, services or allied agriculture, including individuals, proprietorships and partnerships. It is meant for non-corporate micro and small enterprises, and lenders will check that you are not a defaulter on earlier loans.
Interest rate and charges
There is no fixed Mudra interest rate. Each lender sets its own rate as per RBI guidelines, based on the loan amount and your profile. Compare offers from 2–3 banks before applying.
Documents usually needed
- Identity proof (Aadhaar, PAN, voter ID)
- Address proof
- Passport-size photographs
- Proof of business (Udyam registration, shop licence, GST, if any)
- Quotation for machinery or items to be purchased
- Bank statements, and a simple project report or business plan for larger loans
- Caste certificate, if applicable
How to apply
- Prepare a short business plan: what you will do, how much you need and how you will repay.
- Visit a bank, Regional Rural Bank, Small Finance Bank, NBFC or MFI branch, or apply online on the JanSamarth portal or your bank's website.
- Fill in the Mudra loan application for the right category (Shishu, Kishor, Tarun or Tarun Plus).
- Submit your documents. The lender checks your plan and sanctions the loan.
Frequently asked questions
What is the maximum Mudra loan amount?
₹20 lakh under the Tarun Plus category, available to borrowers who have successfully repaid an earlier Tarun loan. For others the limit is ₹10 lakh.
Is collateral needed for a Mudra loan?
No. Mudra loans up to ₹20 lakh are collateral-free.
Can I get a Mudra loan to start a new business?
Yes. The Shishu (up to ₹50,000) and Kishor (up to ₹5 lakh) categories support new businesses, including people with no credit history.
What is the interest rate on Mudra loans?
There is no fixed rate. Each bank or lender decides it as per RBI guidelines.
Can farmers get a Mudra loan?
Not for crop loans. But allied activities such as dairy, poultry, fishery and bee-keeping are covered.
Sources
- PIB: 11 Years of Pradhan Mantri MUDRA Yojana (8 Apr 2026)
- PIB: Mudra loan limit raised to ₹20 lakh
- Department of Financial Services: PMMY