- ₹20 lakhMost you can borrowTarun Plus, after a repaid Tarun loan
- ₹50,000Shishu loan, at most
- NoneCollateral needed
- Lender's rateInterest rateWithin RBI rules
What is Pradhan Mantri Mudra Yojana (PMMY)?
Pradhan Mantri Mudra Yojana (PMMY) is a Government of India scheme that gives loans to small businesses. It was launched on 8 April 2015. A Mudra loan is for work that earns income, such as a shop, a tailoring unit, a repair shop, a food stall, an auto rickshaw or a dairy. It is not for personal needs.
PMMY full form: Pradhan Mantri MUDRA Yojana. MUDRA full form: Micro Units Development and Refinance Agency Ltd. MUDRA Ltd does not lend to the public. It gives money (refinance) to banks, NBFCs and MFIs, and they lend to you. These lenders are called Member Lending Institutions (MLIs).
- Step 1MUDRA LtdSupports banks, NBFCs and MFIs with refinance.
- Step 2Your lenderA bank, NBFC or MFI gives you a loan of up to ₹20 lakh.
- Step 3Your businessUses the loan to earn income and repays in EMIs.
Example: Meena, Indore. Meena runs a small tailoring shop. She takes a Kishore loan of ₹3,00,000 from her bank to buy new sewing machines. She gives no property as security. She repays in 36 monthly EMIs. The bank's rate in this example is 10% a year.
- Monthly EMI
- ₹9,680
- Total interest
- ₹48,486
- Total repaid
- ₹3,48,486
The 10% rate is only an example to show the maths. It is not a Mudra rate. Your lender sets your rate.
By 27 March 2026, about 57.79 crore Mudra loans worth ₹40.07 lakh crore had been given, as per the Government. About 60% of loan accounts in 2024-25 were of women.
Shishu, Kishore, Tarun and Tarun Plus: Mudra loan limits
Mudra loans come in four categories. The category depends only on the loan amount. Shishu means child, Kishore means teenager and Tarun means young adult: the names show the stage of the business.
| Category | Loan amount | Meant for |
|---|---|---|
| Shishu | Up to ₹50,000 | Starting or very small businesses, including those with no credit history |
| Kishore | Above ₹50,000, up to ₹5 lakh | New or running businesses that need money to settle down or grow a little |
| Tarun | Above ₹5 lakh, up to ₹10 lakh | Growing businesses that need machines or more capacity |
| Tarun Plus | Above ₹10 lakh, up to ₹20 lakh | Only borrowers who have taken and fully repaid an earlier Tarun loan |
Tarun Plus is the newest category. It was announced in the Union Budget 2024-25 and notified on 24 October 2024. It doubled the Mudra limit from ₹10 lakh to ₹20 lakh. It is open only to a borrower who has taken a Tarun loan before and repaid it fully. A first-time borrower can get up to ₹10 lakh.
The lender decides the amount you get, based on your business plan, your cash flow and your repayment record. Being in a category does not mean you will get its full limit.
Mudra loan interest rate 2026
There is no fixed Mudra loan interest rate. The Government has deregulated the rate. This means each bank, NBFC or MFI sets its own rate under its own policy, within the overall rules of the Reserve Bank of India (RBI). Lenders are told to keep the rate reasonable.
- The rate can be different at two banks for the same loan, and different for Shishu, Kishore and Tarun loans.
- Many banks link business loan rates to an outside benchmark, such as the RBI repo rate. Then the rate can change during the loan.
- NBFCs and MFIs usually charge more than banks, because their cost of money is higher.
- Ask the lender for its rate, the fees and the EMI in writing before you sign. Check the rate on the lender's own website.
Mudra loan processing fee: the upfront fee or processing charge is also set by each lender. Most banks waive it for Shishu loans. The lender may also ask you to put in some of your own money (the margin), but banks may not ask for a margin on Shishu loans. No life insurance is required for a Mudra loan.
Mudra loan EMI: a worked example
A Mudra term loan is repaid in equal monthly instalments (EMIs). Each EMI has two parts: interest on the amount still owed, and a part of the loan. In the early months, more of the EMI goes to interest.
For Meena's loan of ₹3,00,000 over 36 months at 10% a year, the monthly rate is 10% ÷ 12. The EMI formula gives ₹9,680 a month. Over 3 years she pays ₹3,48,486 in all, which is ₹48,486 of interest.
If her lender charged 11% in place of 10%, the EMI would be ₹9,822 and the total interest ₹53,578. That is ₹5,093 more for one percentage point. This is why comparing lenders matters.
EMIs for some loan sizes, all at the same example rate of 10% a year:
| Loan | Category | Term | Monthly EMI | Total interest |
|---|---|---|---|---|
| ₹50,000 | Shishu | 2 years | ₹2,307 | ₹5,374 |
| ₹2 lakh | Kishore | 3 years | ₹6,453 | ₹32,324 |
| ₹5 lakh | Kishore | 5 years | ₹10,624 | ₹1,37,411 |
| ₹10 lakh | Tarun | 5 years | ₹21,247 | ₹2,74,823 |
| ₹20 lakh | Tarun Plus | 7 years | ₹33,202 | ₹7,88,999 |
Put in your lender's real rate and term on the EMI calculator to see your EMI and the month-by-month schedule.
Mudra loan eligibility: who can apply?
- Yes: An Indian citizen with a plan for a business that earns income
- Yes: Shops, traders, vendors, small factories, artisans, food units and repair shops
- Yes: Service businesses such as salons, tailors, transport and food service
- Yes: Commercial vehicles such as auto rickshaws, e-rickshaws and small goods carriers
- Yes: Activities allied to agriculture: dairy, poultry, fishery, bee keeping, food processing
- Yes: Proprietors, partnership firms and other small non-corporate businesses
- No: Anyone who needs money for personal use (wedding, house repair, phone, travel)
- No: Growing crops (farm loans come under other schemes, such as the Kisan Credit Card)
- No: A defaulter with any bank or financial institution
- No: A loan above ₹20 lakh, or Tarun Plus without a repaid Tarun loan
The lender also checks your credit record, your skill or experience in the work, and whether the business can repay. There is no fixed income or education rule in the scheme, but each lender follows its own norms.
Mudra loan without collateral: the CGFMU guarantee
You do not have to pledge your house, land or gold for a Mudra loan. Loans up to ₹20 lakh under PMMY are collateral-free.
The lender is protected by the Credit Guarantee Fund for Micro Units (CGFMU), run by the National Credit Guarantee Trustee Company (NCGTC), a Government of India company. If a covered loan goes bad, the fund pays the lender a part of the loss. This guarantee is for the lender. It does not reduce what you owe, and a default still harms your credit score.
The lender will usually keep a charge (hypothecation) on the machines, vehicle or stock that you buy with the loan, until it is repaid.
What is a Mudra card?
A Mudra card is a RuPay debit card linked to a working capital limit. Working capital is the day-to-day money a business needs, for stock or raw material. The limit is given as an overdraft (OD) or cash credit (CC).
- Step 1Draw when neededUse the card at an ATM, a bank agent or a shop machine.
- Step 2Pay back any timePut spare cash back into the account.
- Step 3Less interestInterest is charged only on the money in use.
The card is issued by your bank against a Mudra loan. It is not sold by any agent or app. The limit is repayable on demand and is reviewed by the bank every year.
How to apply for a Mudra loan
- Step 11. Prepare a business planWrite what you will do, what you need to buy, its cost and how you will repay.
- Step 22. Choose a lenderA bank, regional rural bank, small finance bank, NBFC or MFI near you.
- Step 33. ApplyAt the lender's branch, or online on the official jansamarth.in portal.
- Step 44. ChecksThe lender checks your papers, credit record and plan, and may visit your unit.
- Step 55. Sanction and paymentThe loan is paid into your account, or straight to the seller of the machine or vehicle.
The Shishu form is one page. The Kishore and Tarun forms are about three pages. Forms are free at the branch and on the MUDRA website. For a Shishu loan, the processing time is normally 7 to 10 days after you give complete papers.
Mudra loan documents:
| Document | Why it is needed |
|---|---|
| Filled Mudra application form | The loan request, with your business details |
| Identity proof (Aadhaar, PAN, voter ID) | To confirm who you are |
| Address proof of home and business | To confirm where you live and work |
| Bank statement for the period asked | To see your income and cash flow |
| Tax returns or GST returns, if any | For larger loans and running businesses |
| Quotations for machines or vehicles | If the loan is to buy equipment |
| Category certificate (SC, ST, OBC), if any | Only if the lender asks |
Mudra loan repayment
- A term loan is repaid in EMIs. The term is set by the lender, based on the life of the asset and your business cash flow.
- The lender may give a short break (moratorium) at the start, before EMIs begin.
- A Mudra card or overdraft limit is repayable on demand and is renewed each year.
- Paying on time builds your credit record. It is also the only way to qualify for Tarun Plus later.
- A missed EMI adds penal charges and is reported to credit bureaus. If you face trouble, speak to your branch early.
Complaints: if a bank does not consider your Mudra application properly, you can complain to its Regional or Zonal Manager. If the bank does not reply in 30 days, you can complain to the RBI Ombudsman at cms.rbi.org.in.
Mudra loan fraud: how to stay safe
- Yes: Given only by a bank, NBFC or MFI
- Yes: Applied for at a branch or on jansamarth.in
- Yes: Only for a business that earns income
- Yes: Fees, if any, are the lender's written charges
- Yes: Money is paid by the lender into your bank account
- No: A call, SMS or WhatsApp message offering a Mudra loan
- No: A "Mudra personal loan" or a Mudra loan through an app
- No: A fee asked for "approval", "file charge" or "GST" before the loan
- No: A fake approval letter with a government logo
- No: A request for your OTP, PIN or card details
The Government and MUDRA Ltd do not appoint agents to sell Mudra loans. If you have paid money to a fraudster, call the cyber crime helpline 1930 or report it on cybercrime.gov.in at once.
Mudra loan: strengths and limits
- Yes: Business loans up to ₹20 lakh with no collateral
- Yes: Available at most bank branches, NBFCs and MFIs in India
- Yes: Simple one-page form for Shishu loans
- Yes: Mudra card for flexible working capital
- Yes: Good repayment opens the way to larger loans
- No: No fixed rate: it differs by lender and can be high at some NBFCs and MFIs
- No: Not for personal needs or crop farming
- No: ₹10 lakh limit unless you have repaid a Tarun loan
- No: The lender may still refuse or give less than you ask
- No: No subsidy: you repay the full loan with interest
Mudra loan vs personal loan
| Mudra loan | Personal loan | |
|---|---|---|
| Purpose | Only a business that earns income | Any personal need |
| Most you can borrow | ₹20 lakh (Tarun Plus) | Set by the lender |
| Collateral | Not needed | Usually not needed |
| Government guarantee to the lender | Yes, under CGFMU | No |
| Interest rate | Set by the lender within RBI rules | Set by the lender within RBI rules |
| Proof of business | Needed (business plan, bank statement) | Not needed; salary or income proof |
| Working capital card | Yes, Mudra card | No |
A loan offered as a "Mudra personal loan" does not exist under the scheme. If the money is not for a business, a Mudra loan is not the right product.
Frequently asked questions
What is the full form of PMMY?
PMMY stands for Pradhan Mantri MUDRA Yojana. MUDRA stands for Micro Units Development and Refinance Agency Ltd. The scheme was launched on 8 April 2015 to give loans to small, non-farm businesses.
What is a Mudra loan?
A Mudra loan is a business loan of up to ₹20 lakh under Pradhan Mantri Mudra Yojana. Banks, NBFCs and microfinance institutions (MFIs) give it to small businesses for income-generating work. No collateral is needed.
What are Shishu, Kishore, Tarun and Tarun Plus?
They are the four Mudra loan categories. Shishu: up to ₹50,000. Kishore: above ₹50,000, up to ₹5 lakh. Tarun: above ₹5 lakh, up to ₹10 lakh. Tarun Plus: above ₹10 lakh, up to ₹20 lakh, only for borrowers who have repaid an earlier Tarun loan.
What is the Mudra loan interest rate in 2026?
There is no single Mudra loan interest rate. Rates are deregulated. Each bank, NBFC or MFI sets its own rate within the rules of the Reserve Bank of India (RBI). Ask the lender for its rate in writing, and compare the rates of two or three lenders.
Who is eligible for a Mudra loan?
An Indian citizen with a business plan for a non-farm income-generating activity, such as making goods, processing, trading or services, can apply. Activities allied to agriculture, such as dairy, poultry, fishery and bee keeping, are also covered. You should not be a defaulter with any bank, and the loan should be ₹20 lakh or less.
Is collateral needed for a Mudra loan?
No. Mudra loans up to ₹20 lakh are collateral-free. Lenders are covered by the Credit Guarantee Fund for Micro Units (CGFMU). The lender may keep a charge on the machines or stock that you buy with the loan.
Is there a Mudra personal loan?
No. A Mudra loan is only for a business that earns income. It cannot be used for personal needs such as a wedding, a phone, a holiday or paying off other loans. Anyone selling a "Mudra personal loan" is not offering a real Mudra loan.
What is the processing fee for a Mudra loan?
The processing fee (upfront fee) is set by each lender under its own policy. Most banks do not charge it on Shishu loans. Nobody can charge you a fee to "approve" or "pass" a Mudra loan. Only the lender's own written charges apply.
How can I apply for a Mudra loan?
Visit the branch of a bank, NBFC or MFI near you and fill the Mudra application form, or apply online on the official jansamarth.in portal. Do not apply through agents, loan apps or websites that ask for a fee.
What is a Mudra card?
A Mudra card is a RuPay debit card given against a working capital limit (an overdraft or cash credit). You can draw money from an ATM or pay at a shop machine when the business needs it, and pay it back when you have spare cash. Interest is charged only on the money you use.
Can I get a Mudra loan of ₹20 lakh?
Only under Tarun Plus, and only if you have taken a Tarun loan earlier and repaid it fully. For other borrowers, the Mudra limit is ₹10 lakh.
Is a Mudra loan free or a subsidy?
No. A Mudra loan is a normal loan. You must repay the full amount with interest in EMIs. There is no subsidy and no loan waiver under the scheme. The government guarantee protects the lender, not the borrower.