Pradhan Mantri Mudra Yojana (PMMY)
Pradhan Mantri Mudra Yojana (PMMY) is a Government of India scheme, launched in 2015, that provides collateral-free institutional credit of up to ₹20 lakh to non-corporate, non-farm micro and small enterprises.
About this Service
Pradhan Mantri Mudra Yojana (PMMY) was launched on 8 April 2015 to “fund the unfunded” extending formal, collateral-free credit to small business owners who otherwise rely on informal lenders. It is administered through MUDRA (Micro Units Development and Refinance Agency Ltd.), which refinances and guides participating banks, NBFCs, RRBs, and MFIs rather than lending directly to borrowers.
Since launch, the scheme has cumulatively sanctioned over 52 crore loan accounts, with women accounting for around two-thirds of all beneficiaries. In the Union Budget 2024–25, the government introduced a new Tarun Plus category, raising the maximum loan ceiling from ₹10 lakh to ₹20 lakh for eligible repeat borrowers.
Loans are sanctioned by the lending institution based on its own credit assessment; MUDRA itself does not disburse funds to borrowers directly.
Loan Categories
Tarun Plus was introduced in the Union Budget 2024–25 and is available only to entrepreneurs who have previously taken and satisfactorily repaid a loan under the Tarun category.
Key Benefits
Key Benefits
- Collateral-free credit; no property, fixed deposit, or third-party guarantee required
- Loan amounts from ₹50,000 up to ₹20 lakh across four categories, matched to business stage
- Government credit guarantee backing through CGTMSE, which covers the lender's risk
- MUDRA Card, a RuPay-linked debit card for flexible working-capital withdrawal (where offered by the lender)
- Nil processing fee on Shishu loans; nominal (around 0.5%) processing fee on Kishor and Tarun loans, and no foreclosure charges
- Available through digital aggregator portals (Udyamimitra, JanSamarth) offering in-principle approval within minutes, in addition to physical bank branches
Eligibility Criteria
Eligibility Criteria
- Must be a non-corporate, non-farm small/micro enterprise, proprietorship, partnership or similar unincorporated business.
- Business activity must be income-generating and fall under manufacturing, trading, services, or eligible agri-allied activities.
- The applicant should not be in default with any bank or financial institution.
- For Tarun Plus specifically: the applicant must have previously availed and fully, satisfactorily repaid a loan under the Tarun category.
- Udyam (MSME) registration is increasingly required by lenders for higher-value loans, particularly Tarun and Tarun Plus.
- Age and other criteria (e.g., minimum age, KYC documentation) are set by the individual lending bank/NBFC within MUDRA guidelines.
Eligible Business Types
- Proprietorship firms
- Partnership firms
- Micro and small manufacturing units
- Service enterprises
- Shopkeepers and traders
- Artisans and small manufacturers
- Food processing units
- Agri-allied activity operators (dairy, poultry, fishery, and beekeeping)
Ineligible Activities
- Direct crop production, irrigation, or land-improvement activities (crop loans are not covered)
- Corporate entities (private/public limited companies) are outside the scope of PMMY.
- Personal or consumption loans: the loan must be for a business purpose
Documents Required
Documents Required
Mandatory Documents
- Duly filled Mudra loan application form
- Identity proof (Aadhaar, PAN, Voter ID, etc.)
- Address proof
- Passport-size photographs
- Business proof / proof of business existence (registration certificate, Udyam certificate, etc., where applicable)
- Bank account statements (where the business has an operating history)
Conditional Documents
- Quotation for machinery/equipment to be purchased
- Proof of category (SC/ST/OBC/minority), where applicable for lender's internal reporting
- Udyam/MSME registration certificate, increasingly required for Tarun and Tarun Plus applications
Frequently Asked Questions
What is PM Mudra Yojana?
A Government of India scheme that provides collateral-free loans up to ₹20 lakh to non-corporate, non-farm micro and small enterprises, through banks, NBFCs and MFIs, under four categories: Shishu, Kishor, Tarun and Tarun Plus.
Who is eligible for a Mudra loan?
Non-corporate, non-farm small/micro entrepreneurs in manufacturing, trading, services or eligible agri-allied activities, with a clean repayment history and no default with any lender.
What is the maximum loan amount under Mudra?
Up to ₹20 lakh under the Tarun Plus category, available only to borrowers who have previously repaid a Tarun loan. First-time borrowers can access up to ₹10 lakh under Tarun.
Is collateral required for a Mudra loan?
No. Mudra loans are fully collateral-free, with the Government of India providing credit guarantee backing through CGTMSE.
Can a new business apply for a Mudra loan?
Yes, new businesses typically start under the Shishu category (up to ₹50,000) and can move to higher categories as the business grows.
What documents are required?
Identity and address proof, photographs, a completed application form, and business proof or bank statements where the business has an operating history.
How do I apply for a Mudra loan?
Apply online via the Udyamimitra or JanSamarth portal, or directly at any participating bank, RRB, Small Finance Bank, or NBFC branch.
Is Udyam/MSME registration mandatory for a Mudra loan?
Not mandatory for all categories, but increasingly required by lenders for Tarun and Tarun Plus applications.
Is a good credit score required?
Not mandatory for Shishu loans up to ₹50,000, but it significantly affects eligibility and pricing for Kishor, Tarun, and Tarun Plus.
What is the interest rate on a Mudra loan?
There is no single government-fixed rate; each lender prices the loan using its own MCLR plus a spread, so rates vary by bank/NBFC and borrower profile.
Is the scheme currently active?
Yes, PM Mudra Yojana is active and has been running since April 2015, now in its 11th year.
What is the official website for Mudra?
mudra.org.in, with applications also available via udyamimitra.in and jansamarth.in.
Can agriculture-related businesses apply?
Agri-allied activities such as dairy, poultry, fishery, beekeeping and food processing are eligible; direct crop production and land-improvement activities are not.
What is Tarun Plus?
A category introduced in the Union Budget 2024–25 offering loans from ₹10 lakh to ₹20 lakh, available only to borrowers who have successfully repaid a prior Tarun loan.
How long does loan approval take?
In-principle approval on digital portals can take minutes for Shishu/Kishor; final sanction and disbursement timelines depend on the lender's assessment, especially for Tarun and Tarun Plus.
Conclusion
Common Application Mistakes
- Applying for a category that doesn't match the actual funding requirement or business stage
- Incomplete or inconsistent business proof, especially for businesses without formal registration
- Not maintaining a clean repayment record before applying for Tarun Plus (which requires a satisfactorily repaid Tarun loan)
- Missing Udyam/MSME registration where the chosen lender requires it for Tarun/Tarun Plus
- Treating Mudra as a personal loan, applications must be for a clearly business-linked purpose.
Practical Application Checklist
- Loan category identified (Shishu/Kishor/Tarun/Tarun Plus)
- KYC and address proof ready
- Business proof / Udyam registration ready, where applicable
- Bank statements or financials are ready if the business has an operating history.
- Repayment track record checked (for Tarun Plus applicants)
- Lender or aggregator portal shortlisted.
Last Verified: 2 September 2026. Scheme guidelines, loan limits, eligibility, and application procedures may change. Verify the latest information on mudra.org.in before applying.
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