The Pradhan Mantri Mudra Yojana (PMMY) is a government-backed scheme in India offering microloans to non-corporate, non-farm small/micro enterprises (MSEs) for income-generating activities. It aims to empower entrepreneurs and fuel the economy. Various lenders inlucding Banks & NBFCs offer loans under Mudra scheme to business or startup owners.
The Mudra Loan interest rates vary from lender to lender with their own set of fee, repayment structures and lending terms. In this page, let’s go through the Mudra loan interest rates offered by various lenders in detail.
Mudra Loan Details
Mudra loans, launched by the Indian government, empower non-farm micro and small businesses with financing. Offered in three categories (Shishu, Kishore, Tarun), they cater to loan needs from ₹50,000 to ₹10 lakh.
These attractive loans boast flexible repayment terms and no collateral requirement, but come with interest rates slightly higher than traditional bank loans. While a viable business plan and potentially a guarantor are needed. Mudra loans offer lower rates than some microfinance options.
Mudra Loan Interest Rates by Banks
Mudra loans act as a stepping stone for budding entrepreneurs, fostering the growth of small businesses across diverse sectors. Understanding the interest rates offered by various banks under the Pradhan Mantri Mudra Yojana (PMMY) is pivotal for aspirants seeking financial support.
| Bank/NBFCs | Interest Rate(p.a.) |
|---|---|
| PSB loans in 59 minutes | 8.50% onwards |
| PNB | 9.15% onwards |
| City Union Bank | 12.00% – 12.50% |
| Fullerton India | 1% – 20.00% |
| Flexiloans | 1% per month onwards |
| Ziploan | 8% onwards |
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List of Banks/NBFCs offering Mudra Loans in 2024
Mudra Loans are offered by various banks and NBFCs, let’s go through the list of banks & NBFCs offering business loans under the Mudra scheme.
- State Bank of India (SBI)
- HDFC Bank
- Axis Bank
- Kotak Mahindra Bank
- Punjab National Bank (PNB)
- Bank of Baroda (BOB)
- Canara Bank
- ICICI Bank
- Indian Overseas Bank
- Bank of Maharashtra
- Central Bank of India
- City Union Bank
- Saraswat Bank
- UCO Bank
- Union Bank of India
- Flexiloans
- Fullerton India
- Lendingkart Finance
- PSB Loans in 59 minutes
- Bajaj Finserv
- Tata Capital
- Ziploan
Mudra Loan Processing Fee
The processing fee varies depending on the lender. Let’s go through an in general idea of the processing fee for Mudra loan based on the loan category.
| Shishu | Nil (No Fee) |
| Kishore | Depends on the Lender (Usually no Fee) |
| Tarun | Depends on the Lender (Usually 0.5% onwards) |
Loan Categories of Mudra Yojana
The Mudra Yojana categorises loans into three types based on their loan amount, catering to different stages of business growth:
1. Shishu Loan:
- Amount: Up to Rs. 50,000
- Ideal for: Micro-businesses with low capital requirements like small traders, vegetable vendors, etc.
- Benefits: Easy access, minimal documentation, flexible repayment.
- Interest rates: Start from 1% p.a. (depending on lender and borrower profile).
2. Kishore Loan:
- Amount: Rs. 50,001 to Rs. 5 lakh
- Ideal for: Established businesses seeking expansion or working capital like workshops, service providers, etc.
- Benefits: Larger loan amount, flexibility for growth, government subsidy for specific categories.
- Interest rates: Range from 11.15% to 20% p.a.
3. Tarun Loan:
- Amount: Rs. 5,00,001 to Rs. 10 lakh
- Ideal for: Medium-sized businesses with high growth potential like manufacturing units, established businesses with significant expansion plans, etc.
- Benefits: Highest loan amount, potentially lower interest rates, government support.
- Interest rates: Typically start at 7.30% p.a. and vary based on lender and borrower profile.
Calculate Mudra Loan EMI
Planning for your Mudra Loan EMI (Equated Monthly Instalment) is crucial for ensuring smooth repayment and avoiding financial strain. Here are two ways to calculate your EMI:
Using Online EMI Calculator:
Several online business loan EMI calculators and Mudra Loan EMI calculators can do the maths for you. Simply enter the following details:
- Loan amount: Choose from loan amount of Shishu or Kishore, or Tarun categories.
- Interest rate: Refer to the current rate for your chosen category (as of December 16, 2023: Shishu: 9.50% - 12.50%, Kishore: 9.00% - 12.00%, Tarun: 8.50% - 11.50%).
- Loan tenure: Choose your preferred repayment period, up to 5 years. Once you enter these details, the calculator will automatically calculate your monthly EMI. This is a convenient and quick way to get an estimate.
Using Manual Calculation:
If you prefer to understand the calculations behind your EMI, use this formula:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1].
EMI is the equated monthly instalment.
P is the principal amount.
R is the interest rate.
N is the loan tenure.
This is how you use this formula-
For example, let's say you take a Shishu loan of ₹30,000 with an interest rate of 10.50% for 3 years. Using the formula, your EMI would be:
P = Rs 30,000.
R = 10.50% i.e., = 0.105 (approx)
N (in months) = 36
Now using the formula;
EMI= [30000 x 0.105 x (1+0.105)^36] / [ (1+0.105) ^36 - 1]
Your monthly EMI will be around Rs. 975(approx)
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Frequently Asked Questions
No, Mudra loans have interest rates (Shishu: 9.50% - 12.50%, Kishore: 9.00% - 12.00%, Tarun: 8.50% - 11.50% as of Dec 16, 2023), but they offer lower rates compared to other microfinance options and come with benefits like collateral-free loans and flexible repayment terms.
Mudra loan interest rates start as low as 1% p.a. but vary depending on the loan type (Shishu, Kishore, Tarun) and borrower profile.
Mudra loans generally have no processing fee for loans up to ₹50,000. However, for loans between ₹50,001 and ₹10 lakhs, some lenders may charge a processing fee of 0.50% (plus applicable taxes) of the loan amount. It's always best to check with your chosen lender for their specific fees and charges.
No, GST is not mandatory for Mudra loans. The Goods and Services Tax (GST) is only applicable on certain financial services, and Mudra loans do not fall under this category.
You can use an online Mudra loan calculator to check your EMI.
Indian citizens above 18 with viable non-farm business plans can access Mudra loans, ensuring documentation and potentially a guarantor.
Shishu (small, up to ₹50,000), Kishore (growing, ₹50,001 - ₹5 lakh), Tarun (established, ₹5 lakh - ₹10 lakh).
No, Mudra loans have interest rates (Shishu: 9.5%-12.5%, Kishore: 9%-12%, Tarun: 8.5%-11.5%), but lower than some microfinance options and offer benefits like collateral-free loans and flexible repayment terms.
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