Hello friends, how you are? Welcome back to one more informative blog. In this article we are going to to talk about Pradhan Mantri Mudra Yojana. We promise you that this information is definitely going to help you. Those who want to know what PMMY is, and also to those who want to know more about it. Moreover, our information is going to add to your general knowledge. Therefore, stay with us in this article and learn about PM Mudra Loan.

Origin of PM Mudra Loan

Honourable Finance Minister – Mr. Arun Jaitley presented the Union Budget for the financial year of 2015 – 2016. Mudra Bank was formed in this budget. In March 2015, it was registered as a company. Therefore, Mudra Bank was under the Companies Act of 2013. Moreover, on 7th of April, 2015 it got registered as a ‘Non Banking Finance Institution’ with the Reserve Bank of India (RBI). Furthermore, on 8th of April 2015, honourable Prime Minister Shri Narendra Modi launched the Yojana. He launched the Mudra Bank at Vidya Bhawan, New Delhi.

What is Pradhan Mantri Mudra Yojana ?

It is a government program that helps small businesses. ‘MUDRA’ stands for ‘Micro Units Development and Refinance Agency’. The aim of this Yojana is to provide financial assistance to small or ‘non-funded’ companies. Moreover, Mudra loans helps those who want to start a new business. It also provides assistance to those who want to expand their existing business. Therefore, different types of loans are available to fit the needs of business owners. These types are Shishu, Kishore and Tarun. We will discuss about these types of loans in further sections.

This Yojana is a part of a larger goal. The goal is the growth of economy and entrepreneurship. Moreover, it can be done by offering required assistance and funding to people who wish to start or expand their own businesses. Therefore, this Yojana was launched.

Types of PM Mudra Loan

There are three types of Mudra loans. Each loan is meant for different size of businesses. Moreover, the aim of each loan is also different. All of these three types make sure that businesses get appropriate amount of loan based on their needs. Furthermore, they also provide flexibility. These three types of Mudra Loan are –

  • Shishu Loan – this type of loan is suitable for small businesses. It is provided in the initial stages of a business. Therefore, the amount of loan is smaller. In other words, Shishu Loan is provided to budding businesses.
  • Kishore Loan – this type of loan is suitable for businesses who are in their growth stage. Businesses which have crossed the initial phase gets this loan. Moreover, the aim is to expand the business. Therefore, the amount of loan is higher than offered in Shishu Loan.
  • Tarun Loan – this type of loan is meant for those businesses which are already well-established. Successful business owners who want to further expand their operations can apply for Tarun Loan.

Benefits of Pradhan Mantri Mudra Yojana

This scheme offers several benefits. These benefits primarily help business owners. Some of the benefits of this Yojana are –

  • Assistance and Funding – as we discussed in the last section, this Yojana provides loan to small or expanding business owners. It helps them to grow, expand and diversify.
  • No Collateral – these loans are free from collateral. Therefore, it reduces the burden of small business owners.
  • Encourages Entrepreneurship – by providing necessary fundings, this scheme encourages entrepreneurship. Moreover, it results in more job opportunities and growth.
  • Flexibility – there are different categories for different type of businesses. Shishu is for budding businesses. Kishore is for businesses which are to expand. Tarun is for well-established business which are to diversify. Therefore, customised financial assistance is provided based on company’s needs.
  • Inclusive Growth – it also reaches to unprivileged society. People living in rural areas and women are also provided help. Therefore, it encourages inclusive growth across the nation.
  • Simple Application process – there is a streamlined process of application. Therefore, it becomes more accessible to the small business owners.

These were some of the benefits that PM Mudra Loan provides.

Challenges faced by the scheme

The Pradhan Mantri Mudra Yojana has helped many businesses. However, it faces a few challenges. These challenges are –

  • Limited Awareness – the reach of this Yojana is not much. There can be more possible beneficiaries who do not even know about this scheme. Therefore, lack of awareness affects its impact.
  • Gender imbalance – the scheme promises inclusivity. However, women still may face challenges in getting the access of benefits.
  • Operational issues – there might be some issues in operation of the scheme. For example, delay is processing of loans, paperwork, etc can negatively effect its impact.
  • Credit risk – businesses might face challenges and fail to generate revenue.
  • Instability of economy – The success of businesses might be affected due to some external factors. Therefore, it might eventually affect the repayment of the loan.
PM Mudra Loan
PM Mudra Loan

Final Words

PM Mudra Loan is a very beneficial scheme launched by the Government of India. It was launched in 2015. The loans aim at benefitting small business owners. Moreover, there are three types of Mudra loans. These types provide flexibility. Additionally, we have also mentioned benefits provided by this scheme. However, it also faces certain challenges. Share with all your friends and spread the information. Thank you.