The Pradhan Mantri MUDRA Yojana (PMMY) provides loans of up to Rs. 10 lakhs for micro and small enterprises belonging to non-corporate and non-farming backgrounds. It was launched on April 8th, 2015 by the Prime Minister of India, Shri Narendra Modi.
Mudra loans extend to organisations that create employment and income in agriculturally allied activities, manufacturing, services, and retail industries.
Think of the PMMY as a refinancing institution that offers business loans through commercial banks and Non-Banking Finance Corporations (NBFCs). It eliminates agents or middle-men as applications are welcome through online or direct approaches.
The three loan products offered under the PMMYsignify the growing levels and needs of an enterprise. Here is a comparison table of the products under the aegis of PMMY:
|Sr no.||Loan name||Loan amount|
|1||Shishu||For loan amounts up to Rs. 50,000|
|2||Kishore||For loan amounts between Rs. 50, 000 to Rs. 5 lakhs|
|3||Tarun||For loan amounts between Rs. 5 lakhs to Rs. 10 lakhs|
Through this scheme, the government also envisions the integration of financial and support services providers. Based on business loan eligibility, the PMMY guides economic and social development. The mission is “To create an inclusive, sustainable and value-based entrepreneurial culture, in collaboration with partner institutions in achieving economic success and financial security”.
Additional Read: New Business Loan Schemes for SMEs
Within the framework and overall objective of growth and development of micro-enterprises under Kishore, Shishu, and Tarun, this scheme extends funding support that meets the requirements of different sector and segments in the nation, which are:
Micro credit scheme
Offered through Micro Finance Institutions (MFIs), loans up to Rs. 1 lakh are available under this category. The scheme aims to assist individual entrepreneurs involved in specific income-generating activities.
Refinance scheme for banks/NBFCs
Through this sub-scheme, commercial and regional lending institutions and NBFCs can lend a working capital of Rs. 10 lakhs for refinancing purposes to every applicant. The financing institutions may also extend a lower business loan interest rateand other benefits to encourage women entrepreneurs.
Working closely with credit bureaus and rating agencies, authorities behind the PMMY understand that besides credit constraints, NCSBs (Non-Corporate Small Business) face many challenges like a shortage of capital to hire human and data resources. Plans to adopt a credit-plus approach are underway. The government will intervene as market makers build an ecosystem filled with capacities for efficiency and sustainability.
For any MSME sector, it is wise to apply for loans in times of mishaps as that is when hiccups in financial assistance brutally hit operations.
Additional Read: Best Way to Get an MSME Business Loan
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