Mudra Loan
Definition
Government-backed loans under Pradhan Mantri MUDRA Yojana for micro/small businesses up to ₹10 Lakh. Three categories: Shishu (up to ₹50K), Kishor (₹50K-5L), Tarun (₹5-10L). No collateral required. Available through all banks and NBFCs.
Why is Mudra Loan Important?
When applying for a loan in India—whether it's a home loan, personal loan, or car loan—the concept of Mudra Loan plays a significant role in determining your total borrowing cost. Lenders use factors like this to assess credit risk, determine eligibility, and structure your EMI schedule. Understanding this term helps borrowers negotiate better interest rates, choose the right loan product, and save money over the loan tenure.
For accurate financial planning, it is highly recommended to use our free online calculators to see how Mudra Loan impacts your specific scenario. Real-time calculations provide clarity on monthly outgoes, principal vs. interest components, and long-term financial burdens.
What is a Mudra Loan?
Mudra Loan is a government-backed business loan under the Pradhan Mantri MUDRA Yojana (PMMY), launched in 2015. It provides collateral-free loans up to ₹10 lakh to micro and small enterprises, helping small business owners, artisans, and self-employed individuals start or expand their businesses.
Mudra Loan Categories
| Category | Loan Amount | Stage |
|---|---|---|
| Shishu | Up to ₹50,000 | Starting / early-stage business |
| Kishore | ₹50,001 – ₹5,00,000 | Growing business seeking expansion |
| Tarun | ₹5,00,001 – ₹10,00,000 | Established business scaling up |
Key Features
- No collateral required
- Available from all public sector banks, private banks, and MFIs
- No processing fee for Shishu category
- Repayment tenure: up to 5 years
- Interest rate: 7.30% – 12% (varies by lender and category)