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


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