Eligibility for Mudra Yojana
Formally launched in the 2015 Union budget of India, the MUDRA scheme or the Pradhan Mantri Mudra Yojana (PMMY) was aimed at providing financial assistance to the small scale entrepreneurs located in remote areas, outside the access of regular areas of banking functionality. Having traced down through the NSSO survey, about 58 crore worth of small businesses have already served as the initial set of target clients for the Mudra Loan scheme.
Talking at length about this institutionalized facility that extends a helping hand to all the start-ups and small enterprises or otherwise referred to as the ‘micro units’ of the country, the ‘Micro Units Development and Refinance Agency’ (MUDRA) Ltd. is exclusively directed towards the funding needs and demands of the non-corporate business ventures in the country.
Certain tasks undertaken by the Mudra Yojana banks involve preparing and launching the policies in accordance with the approved guidelines of the scheme and making sure that it is implemented with efficiency. Along with the increased involvement of Micro Finance Institutions (MFIs) in the scheme’s plan of action, their registration and regulation have become a priority too.
In addition to the basic structure of credit guarantee, creating a solid foundation for the MFIs and the micro units to attain their optimum or desired capacities of efficiency has been focused on at large by this scheme too.
But, having talked about the scheme and its point-of-focus, the basic eligibility to avail the said financial services under the same has been specified by the government as well.
Basic Eligibility criterion
These target business clients were handpicked carefully as they proved eligible to avail the services of the Mudra Yojana scheme that lays down certain conditions to be satisfied for the same like:
- The business unit should be either one of the following:
- Small manufacturing unit
- b) Shopkeepers
- c) Fruit and vegetable vendors
- d) Artisans
- The bank classifies the targets into 3 broad categories with each availing a maximum amount as loan to their credit:
- Shishu – up to Rs. 50,000
- Kishore – up to Rs. 5,00,000
- Tarun – up to Rs. 10,00,000
- A recent addition to the Mudra Yojana fund grossing up to Rs. 1,00,000 crore has been further allocated amounting up to 40%, 35% and 25% respectively to each of the 3
Thus, in technical terms, the loans that are extended to the non-farm income generating ventures in manufacturing, trading and service provision sectors, that amount up to less than Rs. 10 lakhs by the public sector banks to the regional rural banks to the state co-operative banks and urban co-operative banks fall under the PMMY scheme and become what is called ‘MUDRA loans’.
Another pressure point in the scheme is the type of eligible lending institutions that can practice this scheme and extend financial assistance to the eligible borrower base. A rough idea of the same can be inferred from the technical definition of Mudra loans like the regional rural banks, scheduled commercial banks and state to urban co-operative banks. In addition to these institutionalized lenders under the Mudra Yojana scheme, we do have another list of;
- Micro financial institutions like societies and trusts
- NBCFs and MFIs that have been subjected and approved to implement the scheme.
As a result, around 27 public sector banks to 17 private sectors as well as 27 regional rural banks and 25 micro-finance institutions have already been activated under the Mudra Yojana scheme for credit enhancement activities.
Eligible categorical classification as per the Micro Units
With the growth stage of the venture taken as a basis of classification, the approaches to development strategy and funding requirements for these has been put into 3 categories:
- Shishu category – Features exclusive structure designed for start-ups in need of financial support up to the amount of 50,000.
- Kishore category – Here the small ventures that have had business operations in the past but are yet to be officially established are focused upon and helped with loans from Rs. 50,000 to Rs. 5 lakhs.
- Tarun category – This division looks after the business enterprises that are fully established and functioning but do lack a prominent financial foundation to fall back on the business deals with loans extended from Rs. 5 lakhs to Rs. 10 Lakhs.
Once cleared all the eligibility checks of the respective category of business, the application into the Mudra Yojana scheme varies too in accordance with the categories you fall in.