MUDRA Yojana

The Micro Units Development and Refinance Agency or the MUDRA yojana are aimed at financial independence. The vision of this Pradhan Mantri Yojana is to be an integrated financial support portal which is meant to provide services that stand at par with global standards. 

The whole idea of this Yojana is based on inclusive, sustainable and value-based entrepreneurship. It is a public sector financial institution in India that basically offers loans at low rates to micro-finance institutions and non-banking institutions. 

Modernization is the need of the hour and modernization requires better machinery and equipment. The only way small industries can keep pace with multinational conglomerates is if they have enough machinery and access to resources to rely on. MUDRA makes it possible for small scale companies to dream big. 

Here’s a little back story about the same. 


The MUDRA yojana was launched by Prime Minister Shri Narendra Modi on the 8th of April 2015. The nature of the loan is a Working capital and term loan, which means that the loans are issued for companies to function with a decent working capital at hand. 

This working capital helps them get the necessary machinery which enhances both, the production and the quality of the goods produced. 

The Vision behind the MUDRA Yojana

The main vision behind installing the MUDRA yojana is to essentially be an integrated financial support services provider par excellence, benchmarked with global best practices and standards for the bottom of the pyramid universe for their comprehensive economic and social development. 

What the Yojana Offers?

If you have been harboring a fantastic start-up idea but you just lack the means to get going with it. The Pradhan Mantri MUDRA is what you need by your side. There are many MUDRA banks set up across the country under this Scheme. 

These banks provide small entrepreneurs with loans to get going with their small-scale businesses. Up until 2013 itself, roughly 5.77 crore small businesses had been identified out of which only 4% get financial assistance from regular banks. 

Current reports on the MUDRA achievement

Tracking the progress of any program determines its success. Through such timely tracking, we understand how accurately the provisions of a scheme implemented and how well the strategies are being executed. 

For the MUDRA scheme in the financial year 2019-20, below are the numbers: 

Financial Year: 2019-2020

Number Of PMMY Loans Sanctioned: 58365823 (provisional data)

Amount Disbursed: 316099.38 CRORE  (provisional data) 

On what basis the MUDRA banks offer loans?

The main goal of the bank is to regulate microfinance institutions. 

The bank classifies its clients into three main categories. Based on the category the candidate falls into, the maximum amount of that specific category would be lent. 

The categories go as follows:

  1. Shishu: Allows loans up to ₹ 50,000. 
  2. Kishore: Allows loans up to ₹5 lakhs
  3. Tarun: Allows loans up to ₹10 lakhs. 

Other conditions to avail a MUDRA loan:

  1. The loans sanctioned under the MUDRA scheme are guaranteed by Credit Guarantee for Micro Units and the same amount is provided through the National Credit Guarantee Trustee Company. 
  2. The guarantee cover is available for a time period of five years and hence for advances granted under the MUDRA scheme the maximum period offered of 60 months. 
  3. All branches to issue MUDRA RuPay Card for all eligible accounts. 

Who are eligible to Borrow from MUDRA banks?

If you happen to fall under any of the following categories, availing the MUDRA service only means you get to exercise your rights. 

  • If you run a small manufacturing unit
  • If you are a shopkeeper
  • If you are a fruit and vegetable vendor
  • If you are a skilled artisan

Basically, the eligibility of the loan extends to any Indian citizen who has a business plan for a non-farming sector income-generating activity. Such activity may involve manufacturing, processing, trading or service sector and basically anyone whose basic credit need is less than INR 10 lakh. 

Such an individual can reach out to a Bank or an MFI or NBFC for availing the benefits that come under the Micro Units Development and Refinance Agency Ltd. (MUDRA). 

Types of sectors covered under the MUDRA

  1. Land and Transport: This will support units for the purchase of transport vehicles for goods and even personal transports such as autorickshaw or small goods transport vehicles, three-wheelers, passenger cars, taxis, etc. 
  2. Social service and community service activities: This covers units like Salons, parlors, gymnasiums, boutiques, tailoring shops, dry cleaning, cycle and motorcycle repair shops, pharmacies and medicine outlets, courier agencies, etc. 
  3. Food sector: any unit that undertakes activities around food like papad making, achaar or pickle making, jams and jellies, sweet shops, small food chains and stalls and even day to day catering or canteen services, bread, buns, and tea centers, etc. are covered.  
  4. Textile products: MUDRA aims to also cover activities like handloom, power loom, chikan work, zari and zardozi work, traditional embroidery, handwork, traditional dyeing and printing, apparel designing, knitting, cotton ginning, stitching, and various other textile-based activities would be covered under the MUDRA scheme. 

These sectors largely contribute to the Micro units across the nation who, on a daily basis, struggle to make ends meet. With the benefits of the MUDRA scheme gushing in, they have access to all the means that benefit them in the long run. 

Not only is their daily sustenance taken care of, but also, they are given importance in the overall economy and the GDP of the nation. 


The Pradhan Mantri MUDRA yojana is aiming to develop the manufacturing power of India which aligns its intentions with the Make in India initiative undertaken by the Prime Minister. 

The Prime Minister initiative really adds to the overall economy of the nation. While there are large scale industries driving the market, there are small scale industries quickly earning larger margins of profits, which is putting them in a financially stable position and is putting the nation on the industrially developed map. 

While the government supports small businesses, it eventually means that the nation wins.

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