Pradhan Mantri Mudra Yojana (PMMY): Business Loan Scheme

Some of the largest enterprises start at humble beginnings. Cash-strapped with limited technological adoption, it is often difficult for smaller businesses to grow. To overcome the challenges that small enterprises face, the Government has initiated the Pradhan Mantri Mudra Yojana( PPMY). The PMMY is an important initiative by the Government of India. It was launched in 2015 by Prime Minister Narender Modi. The was set up to encourage small and medium enterprises (SMEs) and aid them with loans. Here are 6 important aspects of the Pradhan Mantri Mudra Yojana.

6 Key Facts About The Pradhan Mantri Mudra Yojana

Individuals from the economically weaker sections of society, often do not have the required funds or support to start their business. The PMMY attempts to help them with the below initiatives.

 

Types of Loans Under The Pradhan Mantri Mudra Yojana

There are three kinds of loans provided under the PMMY, based on the enterprise :

• Shishu Loan: up to Rs 50,000. For fledgeling SMMEs, who are just starting work.
• Kishor Loan:ranging between Rs 50,000 to Rs 5 lakh. For medium-scale businesses
• Tarun Loan –ranging between 5 lakh to 10 lakh. Larger operations require more funding.

Eligibility Criteria For The Pradhan Mantri Mudra Yojana

Below are the criteria for availing of loans under the Pradhan Mantri Mudra Yojana :

• Age limit: should be in the age group of 18-65 years.
• The applicant should have a valid proof of identity and address
• Loans under PMMY can be availed by the below enterprises :

1. Artisans involved in handwork, example- embroidery, dyeing-printing, jewellery-making units
2. Small-scale retail shops
3. People in agricultural initiatives- poultry, fishery, beekeeping, agro-processing
4. People involved in the food sector (small, homegrown set-ups making pickles, sweets, bakes, etc and are scaling their operations)
5. Purchase of vehicles like trucks, tempo etc which will be used in the course of business
6. Professionals such as doctors, lawyers
7. Small-service industries such as salons, repair stores, tailoring units, beauty parlours, printing shops.

Institutions Providing Loans Under Pradhan Mantri Mudra Yojana

Individuals seeking loans can approach authorized Public and Private sector Commercial Banks, Cooperative Banks or Regional Rural Banks (RRB). Micro Financial Institutions and Non-Banking Financial Companies can also be approached for these loans.

Important Documentation under Pradhan Mantri Mudra Yojana

These are crucial documents without which the loan initiation process cannot start :

• Aadhaar card, Voter ID or Passport
• Two passport-sized colour photos
• Address proof such as an Aadhaar card, Voter ID or Driving license
• Income tax returns for the last two years
• Business registration documents (GST, MSME registration etc)
• Individual’s Business Plan

Pradhan Mantri Mudra Portal Access

The process is simple and user-friendly.

• Interested parties need to first go to the official website for PMMY.
• Therein, one has to click the login for the PMMY portal link.
• Post this, the login form will be shown on the screen. Please fill in details regarding username and password.
• Once this is cleared, one can access the PMMY portal

Benefits of The Pradhan Mantri Mudra Yojana

The PMMY has augmented the growth of small and medium-scale industries. Here are the key benefits of this scheme :

• Financial Support: The loans support individuals from weaker sections and disadvantaged sectors. They can promote their skills and scale up in due time, to set up small industries.
• No upfront fee: There is no collateral on the loan, hence no initial fee is to be paid by the borrower.
• Reasonable Interest Rate: The Government provides interest rate subsidies for individuals to encourage them and make it easier
• Easy tracking of loan status: the loan is monitored through the portal ‘udyamitra’. Hence, the borrower can easily track the loan status at any time.
• Funds can be used for setting up a business: The loan procured can be used by the individual towards the purchase of machinery, raw materials and equipment. In this manner, the individual’s initial working capital requirement is also supported.
• Increase employment and industrial production: With more industry coming up, there is more employment opportunities. Many of these units are at a small-scale which require artisans to do handwork, for instance, the handicraft sector. Hence, there are more work possibilities and individuals can hope for a better standard of living.
• Fosters growth and opportunity: The PMMY scheme brings in positivity and inclusivity for the smaller communities. Financial burden being eased for the individuals, fosters an entrepreneurial spirit. Women entrepreneurs can also fulfil their aspirations by getting reasonable loans to initiate their businesses.

 

Conclusion

In an era of equality and empowerment of every individual, the Pradhan Mantri Mudra Yojana comes in like a breath of fresh air. By providing varied loans at reasonable rates, they encourage SMEs and MSEs. In the long run, this provides a much-needed impetus to our economy.