Pradhan Mantri Mudra Yojana

Pradhan Mantri Mudra Yojana is a government scheme that provides collateral free micro credit support of up to ₹20 lakhs to non-farm sector income-generating micro-enterprises. Launched on 8 April 2015, this scheme helps small businesses, shopkeepers, and service providers across India get easy access to business finance. In the current financial year 2026-27, the scheme has already sanctioned over 1.40 crore loans worth about ₹1,90,861.92 crore, which shows that it remains fully open for new applications.

Pradhan Mantri Mudra Yojana helps small business owners such as shopkeepers, vegetable vendors, truck operators, and food processors improve their earnings. By giving credit, this scheme works as a catalyst for local economic development. Loans are given through various Member Lending Institutions, including public and private sector banks, regional rural banks, cooperative banks, micro-finance institutions, and non-banking financial companies.

Interest rates are set by individual lending institutions as per Reserve Bank of India guidelines. Most banks also waive processing fees for Shishu loans up to ₹50,000. Please note that there are no authorized agents for this scheme. You should deal directly with banks to avoid fraud.

Pradhan Mantri Mudra Yojana - Introduction

Pradhan Mantri Mudra Yojana is a main scheme of the central government designed to encourage entrepreneurship across India. It provides financial support to micro and small enterprises in the manufacturing, trading, and service sectors, including activities allied to agriculture such as poultry, dairy, and beekeeping.

Applications are accepted all through the year. You can apply online through the official UdyamiMitra portal or visit the nearest branch of any participating bank, NBFC, or micro-finance institution. There is no last date for applying, so eligible business owners can apply whenever they are ready.

Key Information

Benefits

To serve entrepreneurs at different stages of growth, the financial help is divided into four clear categories. Each category is made for a different stage of a business, from a first-time borrower to an established unit that wants to grow further.

Note: Tarun Plus is specifically designed for entrepreneurs who have successfully repaid their previous loans under the Tarun category. The loan limit under Tarun Plus has been increased to ₹20 lakhs to help growing businesses get bigger funding.

Eligibility

This scheme is open to individuals, proprietary concerns, partnership firms, and private limited companies involved in income-generating activities. For example, if Ramesh runs a small repair shop or Sunita operates a food stall, they may be eligible provided they meet the bank's criteria.

To qualify for funding, you should:

• Possess the relevant skills or experience for your proposed business, so the lender can see that you can run it well.
• Maintain a clean credit history with no record of being a defaulter at any financial institution.
• Submit the required documents based on the nature of your business activity.

Application Process

You can start your application process online through the official UdyamiMitra portal. This portal matches you with banks offering suitable rates and gives you a digital approval in principle, after which you visit the bank branch for final payment. Follow these steps.

STEP 1 - Visit the official Mudra website and go to the UdyamiMitra portal.

STEP 2 - Select the "Apply Now" button for a Mudra loan.

STEP 3 - Choose your status as either a new or existing entrepreneur.

STEP 4 - Register using your contact details and verify with an OTP.

STEP 5 - Fill in your professional project details and select your preferred lender.

STEP 6 - Upload your identity, address, and business documents.

STEP 7 - Submit the form and save your unique application number for tracking.

Documents

For Shishu loans, you generally need basic identification and residence proof, such as your Aadhaar card, PAN card, or voter ID, along with a passport-sized photograph and a price quotation for any machinery you intend to purchase.

For larger loans under the Kishore, Tarun, and Tarun Plus categories, you should also prepare:

• Last six months of bank account statements to show your financial position.
• Income tax and sales tax returns for the previous two years.
• A detailed project report outlining the economic viability of your business.
• Proof of business registration and ownership.

References

Download Scheme Brochure | Official Frequently Asked Questions

FAQ's

Is Khadi activity eligible under these loans?

Yes, any activity that generates income in the textile sector, including Khadi production, is eligible for support.

Can I use the loan to buy a vehicle?

Yes, you can use the loan to purchase a CNG tempo or a taxi, provided you use it strictly for commercial income-generating purposes.

Can I apply for a loan using my existing savings account?

Certainly. You can visit your existing bank branch and request the application format to apply for a loan based on your business needs.

What is the typical time frame for processing a Shishu loan?

Per the guidance provided by the Reserve Bank of India, banks should aim to process applications for amounts up to ₹5 lakhs within 2 weeks.

Do I need to submit income tax returns for a ₹20 lakh loan?

While often not required for smaller loans, lending institutions may ask for these records based on their internal risk policies for larger amounts.