Pradhan Mantri Mudra Yojana: Loan Tiers, Eligibility, and How to Apply in 2025
Pradhan Mantri Mudra Yojana (PMMY) is a central government scheme that provides collateral-free loans from ₹50,000 up to ₹20 lakh to small businesses, self-employed individuals, and micro-enterprises through banks, NBFCs, and microfinance institutions. Launched in April 2015 and implemented by MUDRA (Micro Units Development and Refinance Agency) under the Ministry of Finance, the scheme covers four loan tiers, Shishu, Kishore, Tarun, and the newly introduced Tarun Plus. This page covers all four tiers, eligibility, the application form, documents, and how to apply online.
What is Pradhan Mantri Mudra Yojana?
Pradhan Mantri Mudra Yojana (PMMY) was launched on 8 April 2015 by the Government of India to provide formal credit access to small and micro-enterprises in the non-farm sector that have historically been excluded from the banking system. The scheme is implemented through MUDRA, Micro Units Development and Refinance Agency Ltd, a refinancing institution under the Ministry of Finance that refinances banks, NBFCs, and MFIs that lend under the PMMY framework.
MUDRA loans are not disbursed directly by the government, borrowers apply through scheduled commercial banks, regional rural banks, cooperative banks, small finance banks, NBFCs, and microfinance institutions. The scheme covers income-generating activities in manufacturing, trading, and services, including allied agricultural activities. A key differentiator: no collateral is required for MUDRA loans, the scheme operates without any security pledge. In the Union Budget 2024–25, a new tier called Tarun Plus (up to ₹20 lakh) was introduced for entrepreneurs who have previously repaid a Tarun loan successfully.
Key Benefits of Pradhan Mantri Mudra Yojana
| Benefit Type | Amount / Description | Applicable Category |
|---|
| No collateral requirement | Loans sanctioned without any security or guarantee | All MUDRA borrowers |
| No processing fee | MUDRA loans carry no processing or pre-payment charges from the government | All tiers |
| Mudra Card (Working Capital) | Overdraft / credit facility for working capital needs, issued alongside term loan | Eligible borrowers |
| Refinance support | MUDRA refinances lending institutions, enabling them to offer lower rates | Indirect benefit to borrowers |
| Priority for women, SC/ST | Preferential treatment in loan processing and interest rate for women and SC/ST entrepreneurs | Women / SC / ST borrowers |
| Coverage under CGTMSE | Loans eligible for Credit Guarantee Fund Trust for Micro and Small Enterprises cover | Loans above ₹50,000 |
MUDRA Loan Tiers and Loan Amounts
| Tier | Loan Amount | Intended Stage |
|---|
| Shishu | Up to ₹50,000 | Businesses at the startup / seed stage |
| Kishore | ₹50,001 to ₹5 lakh | Established businesses needing growth capital |
| Tarun | ₹5,00,001 to ₹10 lakh | Businesses with a track record seeking expansion |
| Tarun Plus (new, 2024) | ₹10,00,001 to ₹20 lakh | Existing borrowers who have fully repaid a Tarun loan |
MUDRA Loan Interest Rate
| Lending Institution Type | Typical Interest Rate Range |
|---|
| Public sector banks | 8.5% – 12% p.a. |
| Private sector banks | 10% – 15% p.a. |
| Microfinance institutions (MFIs) | 18% – 24% p.a. (RBI-regulated ceiling) |
| Small Finance Banks | 12% – 20% p.a. |
Eligibility Criteria
| Criterion | Requirement |
|---|
| Business type | Non-farm income-generating micro or small enterprise, manufacturing, trading, services, or allied agri activities |
| Applicant type | Individuals, proprietary firms, partnership firms, private limited companies, and other legal entities |
| Age | 18 years and above |
| Credit history | No existing loan default with any bank or financial institution (CIBIL check applied) |
| New or existing | Both new and existing businesses are eligible across all tiers |
| Tarun Plus eligibility | Only borrowers who have fully repaid a previous Tarun loan are eligible for Tarun Plus |
| Income taxpayer | No restriction, income taxpayers are eligible |
| Collateral | Not required, no security pledge under any tier |
Documents Required
| Document | Purpose |
|---|
| Aadhaar card | KYC identity verification |
| PAN card | Tax identity and CIBIL check |
| Address proof | Aadhaar / voter ID / utility bill / rental agreement |
| Business address proof | Utility bill / rental agreement / trade licence |
| Business proof | GST registration, trade licence, Udyam registration, or any government-issued business registration |
| Caste certificate | SC / ST / OBC certificate if claiming category preference |
| Bank statements | Last 6 months of savings or current account statements |
| Passport-size photographs | 2 recent photographs |
| Quotation for machinery / equipment | If loan is for capital expenditure |
| Business plan / project report | Required for Kishore, Tarun, and Tarun Plus tiers |
How to Apply for Pradhan Mantri Mudra Yojana
Online, via Bank Website or Udyamimitra Portal
- Visit udyamimitra.in, the official MUDRA loan application portal.
- Register with your mobile number and Aadhaar; complete OTP verification.
- Select Apply for MUDRA Loan and choose the appropriate tier (Shishu / Kishore / Tarun / Tarun Plus).
- Fill in business details, loan requirement, and personal information.
- Upload required documents.
- Submit the application, it is routed to your preferred or nearest empanelled lender.
- The lender contacts you for verification, assessment, and loan sanction.
- On approval, funds are disbursed to your business account; a Mudra Card may be issued for working capital.
Offline, via Bank Branch or NBFC
- Visit your nearest bank branch, small finance bank, or NBFC branch.
- Request the MUDRA loan application form for the appropriate tier.
- Submit the completed form with all required documents.
- The bank processes the application, conducts credit assessment, and sanctions the loan.
- No separate government portal registration is required for offline applications.
MUDRA Loan, Subsidy and Calculation
PMMY does not carry a direct government interest subsidy for most borrowers, the benefit is collateral-free access to formal credit at regulated rates. However, certain convergence schemes provide interest subvention on MUDRA loans for specific categories.
| Parameter | Amount |
|---|
| Loan amount | ₹3,00,000 |
| Interest rate (public sector bank) | 10% p.a. |
| Tenure | 3 years |
| Approximate EMI | ₹9,681/month |
| Total interest outgo | ₹48,516 |
| Processing fee | Nil (government directive) |
State-Wise MUDRA Loan Implementation
| State | Top Lending Channels | State-Specific Notes |
|---|
| Uttar Pradesh | SBI, PNB, Bank of Baroda, Bandhan Bank, MFIs | Highest MUDRA disbursement state by volume; strong MFI presence in rural areas |
| Maharashtra | SBI, HDFC Bank, ICICI Bank, Kotak, small finance banks | Urban-heavy disbursement; strong service sector loan base in Mumbai, Pune |
| Tamil Nadu | Indian Bank, Canara Bank, Equitas SFB, Ujjivan SFB | Strong handloom and food processing base; Kishore tier most common |
| West Bengal | UCO Bank, Bandhan Bank, MFIs | Bandhan Bank (MFI origin) has highest rural MUDRA penetration in WB |
| Rajasthan | Bank of Baroda, SBI, AU SFB | Handicraft and textile projects prominent; strong Shishu tier volume |
| Karnataka | Canara Bank, SBI, HDFC, Jana SFB | Tech-adjacent service businesses in Bengaluru; agro-processing in rural Karnataka |
| Bihar | SBI, Central Bank, Bandhan Bank, MFIs | High Shishu tier volume; convergence with JEEViKA (Bihar's NRLM implementation) for women |
| Madhya Pradesh | SBI, Bank of India, small finance banks | Tribal entrepreneur loans in NER-adjacent districts; forest produce-based businesses eligible |
| Gujarat | SBI, Bank of Baroda, HDFC, Kotak | Manufacturing and trading-heavy; strong Tarun tier volume in Surat and Ahmedabad |
| Andhra Pradesh | SBI, Indian Bank, Andhra Bank, MFIs | Convergence with YSR Mudra (state top-up scheme) for women entrepreneurs in some districts |
