Mar 312016
 

Mudra Yojana vs. Personal loan

Mudra loan and Personal loan are two different types of loans that are given by the banks or other financial institutions to the people. These two loan types cater different needs altogether. The first one, Mudra loan is for the small and micro scale industries and businessmen who want some financial support to expand or maintain their business. Whereas the later is one of the most common loan type which can be availed by any person from any bank or financial institute and the loan amount can be used in any personal reason.

Mudra Yojana vs. Personal loan

What is a Mudra loan?

For the businessmen who do not have financial stability and the entrepreneurs who want a push to get their ideas successful, the Modi Govt. has launched this credit scheme. Mudra will provide loans up to Rs. 10 lakh which through Mudra cards so that it can be used in the business. As the micro industries, small scale factories, entrepreneurs, etc find it very difficult to keep pace with the big players in the market. It was difficult for them to get easy loans. So the Govt. wanted to give them easy loans with low interest rates and easy payment options.

What is a Personal loan?

A personal loan is a universal type of loan which can be taken by any one by person. Personal loan may cater many needs. One can use personal loan to buy a car or to invest in some business or to buy a vacation trip. In case of Mudra loan, there is a restriction of using them in promoting business and buying necessary equipments and machineries for the business. But in personal loan, the fund can be used in any personal need.

Mudra loan easy interest rate and EMI options

As the Mudra loan is especially tailor made for the lower middle class businessmen and entrepreneurs who do not have financial stability or assets so that they get easy loans from banks. So the Govt. has decided to keep the loan procedure very simple and the rate of interest is also subsidized so that the weaker sections may also avail the loan facility. The interest rates are very nominal and the banks offering the Mudra loans charge 10 – 16 % interest rates on the loans depending on the categories of the loan amount.

Personal loans interest rates and EMI options 

The interest rates of the personal loans are not fixed and depend on the borrower who is giving that loan. Every bank or financial institution offer personal loan to their customers in their pre determined interest rates. The interest rates of the most common type of personal loans range from 11 % to 22 %. The EMI options are very different from the Mudra loan where the Govt. provides easy EMI options to its beneficiaries. Here as per the economic condition of the beneficiary, the financial institutes offer them personal loans.

Slabs of Mudra loan

The Mudra loan is given in different slabs as per their requirements. The three categories where the loan is being provided are – Sishu, Kishor and Tarun. The Kishor is the basic or the entry level of loan in Mudra scheme. Loans of maximum Rs. 50,000 can be availed under the Kishor loan scheme. The interest rate is also low i.e. 10 – 12 % per annum. The next category of Mudra loan is Kishor. Here, the loan amount ranges from Rs. 50,000 to Rs. 5 lakh. As the amount rises, so does the interest rate. The interest rate charged under the Kishor Mudra scheme ranges from 14 – 16 % per annum. The last category is Tarun where loans from 5 – 10 lakh can be availed.

Credit technique of the Mudra and personal loan

The beneficiaries are given the credit amount in two different techniques in Mudra and personal loans. In case of Personal loans, the beneficiaries were credited the loan amount in their respective savings accounts. But in case of Mudra loan, the credit amount is credited in form of Mudra credit cards which looks similar to a debit or credit card.

Some striking differences of Mudra and Personal loans:

Sl. No. Mudra Loan Personal Loan
1 It is totally Govt. owned and administered. It may be from a Govt. organization or a private bank.
2 Maximum loan is RS. 10 lakh. No limit.
3 Designed for financially unstable businessmen and entrepreneurs. No specific beneficiary type.
4 Loan credited in Mudra cards.  Loan credited in bank account.

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