Pradhan Mantri MUDRA Yojana (PMMY)

What is Pradhan Mantri MUDRA Yojana?

Pradhan Mantri MUDRA Yojana (PMMY) is a Government of India scheme launched on 8 April 2015 to provide institutional, collateral-free credit to micro enterprises that were previously dependent on moneylenders. MUDRA stands for Micro Units Development and Refinance Agency, the institution set up to refinance lenders under the scheme.

According to the Department of Financial Services, PMMY loans are extended by Member Lending Institutions (MLIs) - public and private sector banks, foreign banks, regional rural banks, small finance banks, NBFCs, microfinance institutions and NBFC-MFIs - to non-corporate, non-farm enterprises with a credit requirement of up to Rs 20 lakh.

Key objectives

• Bring the country's smallest businesses - roughly six crore of them - inside the formal banking system.
• Remove collateral as a barrier so that first-generation entrepreneurs without property can borrow.
• Fund working capital and equipment for manufacturing, trading, services and activities allied to agriculture.

Main features

• Four loan categories, matched to the stage of business growth.
• No collateral and no processing fee for the smallest loans at most public sector banks.
• Loans are covered by a guarantee, so the lender's risk on an unsecured advance is shared.
• As of the scheme's 11th anniversary in April 2026, over Rs 40.07 lakh crore had been sanctioned across more than 57.79 crore loan accounts.
• Women borrowers account for 59.81% of loan accounts and 37.45% of the disbursed amount; SC, ST and OBC borrowers together account for 45.52% of accounts.

What are the four MUDRA loan categories?

Tarun Plus was introduced with effect from 24 October 2024, doubling the PMMY ceiling from Rs 10 lakh to Rs 20 lakh. It is a repeat-borrower category - a first-time applicant cannot start at Tarun Plus. The track record of full repayment on the earlier Tarun loan is what unlocks it.

Who is eligible for a MUDRA loan?

You can apply if:

• You are an Indian citizen aged 18 years or above.
• You run or plan to start a non-corporate, non-farm micro enterprise - proprietorship, partnership, self-help group, or a small manufacturing, trading or service unit.
• Your credit requirement is up to Rs 20 lakh.
• Your business is in manufacturing, trading, services, or an activity allied to agriculture such as dairy, poultry, beekeeping, fisheries, agri-clinics or food processing.
• Your repayment record with existing lenders is clean.

You cannot apply if:

• You need a crop loan or funds to buy agricultural land - crop finance is not eligible under PMMY and is served by the Kisan Credit Card.
• You need more than Rs 20 lakh, which is above the PMMY ceiling.
• The borrowing entity is a large corporate rather than a micro enterprise.
• You are a defaulter on an existing loan or your account is classified as a non-performing asset - lenders will not sanction a fresh MUDRA loan.
• You are applying for Tarun Plus without having repaid a Tarun loan - that category is not eligible to first-time or partly-repaid borrowers.
• The loan is for personal consumption rather than an income-generating activity.

What documents are required for a MUDRA loan?

Larger Tarun and Tarun Plus proposals normally also need a project report or business plan and, where the unit is already running, income tax returns and audited accounts.

How to apply for a MUDRA loan online

1. Open udyamimitra.in or jansamarth.in, the two official online application routes for PMMY.
2. Register with your name, mobile number and email address, and verify the OTP sent to your phone.
3. Select the Pradhan Mantri MUDRA Yojana product and choose the category - Shishu, Kishore, Tarun or Tarun Plus - matching the amount you need.
4. Enter your personal, business and financial details, including the purpose of the loan, expected turnover and existing borrowings.
5. Upload the identity, address, business and bank statement documents in the formats specified.
6. Choose a lender from the list of member lending institutions shown for your district and submit the application.
7. Track the application on the portal. The lender will contact you for verification, and on sanction the funds are credited to your business account.

How to apply for a MUDRA loan offline

1. Visit the branch of any bank, small finance bank, RRB, NBFC or microfinance institution that participates in PMMY.
2. Ask for the PMMY loan application form for your category and fill it in.
3. Attach the identity, address, business and bank statement documents, plus a project report for Tarun and Tarun Plus proposals.
4. Submit the form and collect an acknowledgement. Follow up with the branch manager, who is the sanctioning authority for most MUDRA loans.

How much does a MUDRA loan cost?

PMMY does not fix a single interest rate. Each member lending institution sets the rate under RBI guidelines according to its own benchmark lending rate and the borrower's risk profile, so rates differ between a public sector bank, an NBFC and a microfinance institution. Ask each lender for the annualised rate, the processing fee and the total repayment schedule in writing before you sign.

The loan is collateral-free up to Rs 20 lakh. A lender that demands property security or a third-party guarantee for a MUDRA loan is acting outside the scheme's terms, and that can be escalated to the bank's grievance cell or to the RBI Ombudsman.

Working capital sanctioned under PMMY can be drawn through a MUDRA card, a RuPay debit card that lets a borrower withdraw and repay in instalments, with interest charged only on the amount actually used.

Help and grievance redressal

• PMMY national toll-free numbers: 1800-180-1111 and 1800-110-001
• Official portal: mudra.org.in, which lists state-wise helpline numbers and the full list of member lending institutions
• Online application portals: udyamimitra.in and jansamarth.in
• Escalation: the nodal officer of the lending bank, then the bank's grievance redressal cell

No agent can guarantee sanction of a MUDRA loan, and no fee should be paid to any intermediary. The sanction decision rests entirely with the lending institution's credit appraisal.