On 8th April 2025, India celebrates 10 years of the Pradhan Mantri Mudra Yojana (PMMY)—a flagship initiative launched in 2015 to fund the unfunded by offering collateral-free loans to micro and small enterprises.
Objective of PMMY
- To provide collateral-free credit to micro enterprises.
- To “Fund the Unfunded” by bringing informal businesses into the formal financial system.
- To promote financial inclusion and empower marginalized and socio-economically neglected classes.
Key Features
- Launched: 2015
- Ministry: Ministry of Finance
- Implementing Body: MUDRA (Micro Units Development and Refinance Agency Ltd.)
- Acts as a refinance agency, not a direct lender.
- Provides funds to intermediaries: Banks, NBFCs, and MFIs.
Eligible Sectors
- Manufacturing
- Trading and Services
- Activities allied to Agriculture
Categories of MUDRA Loans (Based on Stage of Enterprise)
| Category | Loan Amount | Focus Area |
| Shishu | Up to ₹50,000 | Start-ups/new businesses |
| Kishore | ₹50,001 to ₹5 lakhs | Mid-stage enterprises |
| Tarun | ₹5,00,001 to ₹20 lakhs (updated) | Growth/expansion phase |
| Tarun Plus | Rs. 10 lakh and up to Rs. 20 lakhs | Successfully repaid loans under the Tarun category |
How to Avail MUDRA Loans
- Via Banks, NBFCs, MFIs
- Online via Udyamimitra portal
- Assistance from Mudra Mitra App for loan guidance
Nature of Financial Assistance
- Term Loan
- Working Capital
- Overdraft Limit
- Composite Loan (for capital + working capital)
Collateral-Free Guarantee
- Backed by the Credit Guarantee Fund for Micro Units (CGFMU).
- Ensures risk-free lending for banks, no collateral needed from borrower.
Additional Instruments
- Mudra Card: Working capital via overdraft; can be used like a debit card.
- Mudra Mitra Mobile App: Guides applicants through the loan process.
Interest Rate & Concessions
- Interest rates are deregulated.
- 2% Interest Subvention for prompt repayment under Shishu Loans (for 12 months).
- 25 bps interest rebate to NBFCs/MFIs lending to women entrepreneurs.
