The term MUDRA stands for- “Micro Units Development and Refinance Agency Bank”. It gives loans at a very reasonable rate to non-corporate, non-farm small/micro enterprises. It was launched by Prime Minister, Narendra Modi on 8th April, 2015
These loans are provided by Commercial Banks, RRBs, Small Finance Banks, Cooperative Banks, MFIs and NBFCs.
Under this scheme, a beneficiary can avail any of the three products according to his needs: ‘Shishu’ ‘Kishore’ and ‘Tarun’.
The basic intention of establishing MUDRA is to extend the reach of financial institutions to small business entities involved in manufacturing, trading and service sectors.
Any Indian citizen who has a prospective business plan for a non-farm sector income generating activity such as manufacturing processing, trading or service sector, whose credit demand is less than Rs. 10 Lakh, is eligible for this scheme.
The borrower can reach any of the authorized financial institution along with the application and required documents in order to get the loan.
The loan should be repaid in 3-5 years including a moratorium of up to 6 months depending on the activity/ income generation.