INTRODUCTION
In India, starting his own business is a dream of many people, but the main hurdle is the non-availability of funds. Because of financial constraints, a person cannot start their own business. The Government of India initiated the Pradhan Mantri Mudra Yojna(PMMY) on April 8, 2015, to straightaway help small business owners and entrepreneurs. This scheme gives easy interest-free loans up to 10 Lakhs to small and micro businesses, and helps them to expand and ultimately contribute to India’s economy. These loans are given through Banks, microfinance institutions(MFIs), and non-banking financial companies(NBFCs) to help entrepreneurs start and then grow their businesses.
The main objective of Mudra yojna is to correspondingly encourage entrepreneurship, generate employment, and thereby support national economic growth in India, especially in rural and semi-urban areas.
OBJECTIVE OF PRADHAN MANTRI MUDRA YOJANA: –
1. To promote self-employment: The main objective of Mudra Yojna is to support small businesses and, correspondingly, to grow without any financial issues. The scheme provides collateral-free loans, thereby helping emerging businessmen.
- To support small businesses: It helps non-corporate small enterprises, in fact, by providing collateral-free loans.
3. Financial Inclusion: The scheme makes the banking system accessible to small businesses and ultimately encourages people to come forward to get a loan and establish their businesses.
- Increasing employment: By encouraging entrepreneurship, the scheme furthermore creates job opportunities.
5. Boosting Women entrepreneurs: The scheme focuses especially on giving loans to businesses that women start.
TYPES OF MUDRA LOANS: –
Based on funding requirement, Pradhan Mantri Mudra Yojna offers the following three categories of loans: –
1. SHISHU (Up to ₹50,000)
This loan provision is for new start-ups, particularly businesses. This is ideal for small-scale businesses, specifically for shopkeepers, artisans, tailors, and street vendors. Moreover, for getting this loan, minimum documentation is required.
2.KISHORE (₹50,000 to ₹5 Lakhs)
This loan is for those kind of businesses that particularly needs extra money for growth and expansion. This is appropriate for businesses, specifically those planning to upgrade their equipment or expand their services.
Moreover, to get this loan, the applicant has to submit a business plan and financial statements.
3.TARUN (₹5 Lakhs to ₹10 Lakhs)
This loan provision is for well-established businesses that particularly need larger funds for expansion and growth. This needs proper financial records, and furthermore, business stability proof, and repayment capability.
ELIGIBILITY CRITERIA:-
Age: Applicant age should be between 18 years and 65 years.
Indian nationality with a business idea
No previous loans pending with any bank.
A well-defined and working business plan
An operating business or a plan to start a new business.
DOCUMENTS REQUIRED FOR MUDRA LOAN
Scheme needs the following documents for applying for a Pradhan Mantri Mudra Loan:-
Identity Proof:
Aadhar card, PAN card, Passport, Voter ID
Address Proof:
Electricity Bill, Ration card, Telephone Bill, Rental agreement (If applicable)
Business-related documents:
Proof of existence of business, Last 6 months bank statements, Business Registration certificate(If applicable), Income Tax returns(If applicable)
HOW TO APPLY FOR MUDRA LOAN:
Pradhan Mantri Mudra Loan can be applied for both online and offline, and the application is very simple and user-friendly.
Online Application Process:
1. Identify the banks/NBFCs that offer Mudra loans and thereupon visit their website.
2. As per the Loan category of Shishu, Kishore, and Tarun, download the application form accordingly.
3. Fill in the details as required in the application form, such as name, age, address, business type, nature, and loan amount.
4. Upload necessary documents such as Aadhar card, PAN Card, Business proof, etc.
- Submit the form and thereupon wait for verification and approval.
6. The loan amount will be consequently credited once the application is approved.
 Offline Application Process:
1. Visit a nearby bank or financial institution that offers Mudra Loans.
2. Collect Mudra Loan Application Form.
3. Fill the form with details as required.
4. Attach necessary documents and submit them.
5. The bank will review the application form submitted by you.
6. If approved, the applicant will get the loan amount.
BENEFITS OF MUDRA YOJNA:-
1. Collateral-free loans: For applying for a Mudra loan, there is no necessity to pledge any property or assets.
- Boosts small Businesses’ Growth: Through this scheme, the Government encourages small businesses to expand.
3. Easy application Process: The process for applying for the Mudra Loan is very easy and user-friendly. The documentation is very simple and has fast processing.
4. Low Interest rates: Up to 10Lakhs of loan amount, there is no interest. But for loans of more than 10 Lakhs, interest rates are lower compared to personal loans.
5. Flexible repayment terms: The Scheme has formulated repayment terms to suit the beneficiary’s requirements, and they vary up to 5 years.
6. Special benefits for women entrepreneurs: The scheme, with relaxed terms and conditions, encourages businesses started by women. The share accounts held by women is 69%.
7. Emerging entrepreneurs: The Mudra yojna has created 8 crores new entrepreneurs.
8. Innovation: The scheme has induced a creative ecosystem, innovation, and also it has also imbibed a risk-taking attitude in entrepreneurs, which has ultimately generated a lot of job opportunities.
9. Bridging the differences: The scheme has evidently bridged the gap between India’s microfinance and banking sectors, providing loans to small entrepreneurs.
10. Banking in unbanked areas: PM Mudra Yojna provides loans to the lower half of India, providing loans to unbanked areas.
11. Inclusion: PMMY has benefitted all segments of Indian society, such as general, scheduled caste/tribe(SC/ST) groups, and other backward classes(OBCs). The share of accounts held by SC/ST and OBCs is a total of 51%of all Mudra accounts.
12. States such as Odisha, Bihar, and Uttar Pradesh have recorded all-around gains from the PMMY.
CHALLENGES AND WAY FORWARDS:-
CHALLENGES:-
1. Misuse of funds: Though many people take loans by showing fake documents for establishing their business, but they use this fund for their personal use.
2. Loan Non-repayment: Many people take loans, but later they struggle to repay the loan, which ultimately leads to financial loss to banks and an increase in Non-performing assets (NPAs).
3. Lack of awareness: Many small businessmen are not aware of the PM Mudra Yojna. They don’t understand the basics of financial management.
4. Slow loan approval system: Due to formalities and paperwork, Loan processing takes its own time.
5. Threat for banks: Banks hesitate to give loans due to high chances of non-repayment.
WAY FORWARDS:-
- Track loan usage: The Bank should monitor that the Mudra loan is used only for business and not for any personal use. An individual should be strictly instructed to use the fund for expanding their business only.
- Financial training: Periodic training should be arranged for borrowers to make them aware of financial management and repayment of the loan.
- Use a digital platform: Use a digital platform to minimize fraud and to speed up loan processing.
- Better risk protection for banks: Encourage banks to lend more and frame policy to protect he interests of banks.
- Support for Women and rural entrepreneurs: Women and entrepreneurs in Rural areas need extra support to grow their business. The government should help them by providing Mudra loans.
CONCLUSION:-
The Pradhan Mantri Mudra Yojna is a blessing for small business owners, startups, and entrepreneurs in India. If a person has a business idea but is unable to execute it, Mudra Yojana is a perfect solution for them. It correspondingly gives easy access to funds, promotes self-employment, and boosts the Indian economy.
The application procedure is very easy as well as user-friendly, and a willing person may visit the official website to apply for a Mudra Loan.
https://www.mudra.org.in/Home/PMMYBankersKit
A person may accordingly select Mudra loans, Shisu, Kishore, or Tarun as per their business requirement. In a very short span of time, Mudra Yojna has written so many success stories, like an increase in Women Entrepreneurs, business expansion of small manufacturers and traders, and also growth in the transport business.
Mudra Yojna is significantly helping in the country’s economic growth.