NHDP: Concessional Credit / Weaver MUDRA Scheme

What is the Weaver MUDRA Scheme?

The Concessional Credit / Weaver MUDRA Scheme is a component of the National Handloom Development Programme (NHDP), run by the Ministry of Textiles. The scheme gives handloom weavers affordable, timely bank credit for working capital, raw materials, tools and equipment, so they depend less on high-cost informal lenders.

According to the Ministry of Textiles, the scheme combines three supports on a bank loan: margin money assistance, interest subvention and credit guarantee fee for a period of three years. Loans up to Rs 10 lakh are treated as MUDRA loans; amounts above Rs 10 lakh fall under Concessional Credit.

Main features

• Effective interest rate of 6% per annum to the weaver, with central interest subvention capped at 7%.
• Margin money of 20% of the loan, up to Rs 10,000 for an individual weaver (up to Rs 20 lakh for handloom organisations, at Rs 2 lakh per 100 weavers).
• Credit guarantee on the loan for three years.
• Claims processed through the Handloom Weaver MUDRA Portal, built with Punjab National Bank.

Who is eligible for the Weaver MUDRA Scheme?

You can apply if you are:

• An individual handloom weaver or weaving entrepreneur, or
• A handloom organisation (such as a cooperative or producer body), with a genuine credit need for weaving activity, and
• Your application is sponsored by a Weavers' Service Centre or the State Government to a participating bank.

You cannot apply if:

• You are not engaged in handloom weaving, the scheme is specific to the handloom sector, so non-weavers are not eligible.
• You want a cash grant unconnected to a bank loan, the benefits (margin money, interest subvention, guarantee) attach to a sanctioned bank loan, so a standalone grant request cannot apply here.

What documents are required?

How to apply for the Weaver MUDRA Scheme

1. Approach your nearest Weavers' Service Centre or the State handloom department to have your loan application sponsored.
2. Submit the loan application with KYC documents to a participating bank.
3. The bank appraises and sanctions the loan under MUDRA (up to Rs 10 lakh) or Concessional Credit (above Rs 10 lakh).
4. The bank applies the 6% concessional rate, credits margin money up to Rs 10,000, and files interest-subvention and credit-guarantee claims through the Handloom Weaver MUDRA Portal.
5. The loan is disbursed to your bank account and serviced under the concessional terms for the three-year support period.

How much benefit does the scheme provide?

The scheme reduces the cost of borrowing for a weaver in three ways: it caps the effective interest at 6%, adds margin money of 20% up to Rs 10,000 so the weaver puts in less of their own money, and provides a credit guarantee that makes banks more willing to lend without heavy collateral. Together these lower both the upfront and running cost of a handloom loan of up to Rs 10 lakh under MUDRA, and larger loans under Concessional Credit. There is no flat cash payout; the benefit is cheaper, guaranteed credit for weaving.

MUDRA loan vs Concessional Credit — what is the difference?

The Weaver MUDRA Scheme covers two loan bands under one set of benefits. A loan up to Rs 10 lakh is treated as a MUDRA loan and is the route most individual weavers use for working capital, yarn and small equipment. A loan above Rs 10 lakh falls under Concessional Credit, used mainly by larger weaving entrepreneurs and handloom organisations for scaling up. Both bands get the same three supports, the 6% concessional interest with central subvention capped at 7%, margin money (up to Rs 10,000 for an individual weaver, up to Rs 20 lakh for an organisation) and a credit guarantee for three years.

What can the loan be used for?

According to the Ministry of Textiles, a Weaver MUDRA loan meets the genuine credit needs of weaving, working capital, purchase of raw material such as yarn and dyes, and tools or equipment like looms and accessories. The aim is to move weavers away from high-cost informal moneylenders towards timely bank credit. The concessional interest and credit guarantee apply for three years from first disbursement, after which the loan continues on the bank's normal terms. Because the benefits are tied to a sanctioned loan, keeping repayments regular is what preserves the weaver's access to concessional credit in future cycles.

Help and more information

• Handloom portal: myhandlooms.gov.in
• Bunkar Mitra handloom helpline: 1800-208-9988
• Weavers' Service Centre in your region, which sponsors and guides the loan application.