What are Micro Units Development and Refinance Agency (MUDRA) Loans?

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What are Micro Units Development and Refinance Agency (MUDRA) Loans? Blog Image

Overview:

The Central Government has recently made MUDRA loans given to joint liability group micro enterprises eligible for the Credit Guarantee Fund for Micro Units.

About MUDRA Loans:

  • MUDRA Loan is offered under the Pradhan Mantri Mudra Yojana (PMMY).
  • PMMY was launched in 2015 with the aim to help small-scale businesses expand and attain success. 
  • Support under the scheme: It provides loans of up to 10 lacks to non-corporate, non-farm small/micro enterprises. 
  • Purpose of loan: To start a new business, enhance existing or meet working capital requirements, and for business expansion purposes
  • These loans are classified as MUDRA loans under PMMY. 
  • Eligibility: Any Indian Citizen who has a business plan for a non-farm sector income-generating activities such as manufacturing, processing, trading, or service sector.
  • These loans are given by Commercial Banks, RRBs, Small Finance Banks, MFIs, and NBFCs. 
  • Types of loans:
    • Shishu - Covering loans up to Rs 50,000; 
    • Kishor - Covering loans above Rs 50,000 and up to Rs 5 lakh
    • Tarun - Covering loans above Rs 5 lakh and up to Rs 10 lakh.

 


Q1) What is a joint liability group? 

Joint Liability Group (JLG) is an informal group comprising preferably of 4 to 10 individuals for the purposes of availing bank loan either individually or through the group mechanism against mutual guarantee.

Source: MUDRA loans to joint liability group micro enterprises now eligible for credit guarantee fund