Last updated: October 2026 · 3 min read
Pradhan Mantri MUDRA Yojana (PMMY), launched in April 2015, provides collateral-free loans to non-farm micro and small businesses such as shopkeepers, artisans, food vendors, repair shops and small manufacturers. MUDRA stands for Micro Units Development and Refinance Agency.
Loan categories
| Category | Loan amount | Suitable for |
|---|---|---|
| Shishu | Up to ₹50,000 | New and very small businesses |
| Kishore | Above ₹50,000 up to ₹5 lakh | Growing businesses |
| Tarun | Above ₹5 lakh up to ₹10 lakh | Established businesses expanding |
| Tarun Plus | Above ₹10 lakh up to ₹20 lakh | Entrepreneurs who have successfully repaid a previous Tarun loan |
Tarun Plus was introduced in October 2024 after the Union Budget 2024-25 doubled the Mudra limit to ₹20 lakh.
Key features
- No collateral; loans are covered by the Credit Guarantee Fund for Micro Units (CGFMU).
- Available from public and private banks, regional rural banks, small finance banks, NBFCs and MFIs.
- Term loans or working capital, including a MUDRA card for overdraft.
- Interest rates are set by lenders under RBI guidelines; there is no fixed national rate.
- Processing fees are generally waived for Shishu loans.
Who can apply?
Indian citizens, proprietorships, partnerships and small companies engaged in manufacturing, trading or services, and activities allied to agriculture such as dairy, poultry and fisheries, with a business plan needing up to ₹20 lakh.
Documents usually required
- Identity and address proof (Aadhaar, PAN, voter ID).
- Business proof: Udyam registration, GST, licences.
- Bank statements for the last six months.
- Quotation for machinery or items to be purchased.
- Business plan or project report for larger loans.
- Photographs.
How to apply
- Visit a bank branch or apply online through the JanSamarth portal.
- Choose the Mudra category that fits your needs.
- Submit documents and business details.
- The lender appraises and sanctions the loan.
Frequently asked questions
Is a Mudra loan interest-free?
No. It is a regular loan with interest decided by the lender; the benefit is collateral-free access.
What is the maximum Mudra loan?
₹20 lakh under the Tarun Plus category.
Can a startup get a Mudra loan?
Yes, new micro enterprises can apply, usually starting with Shishu or Kishore loans.
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This article is for general information, not financial, tax or legal advice. Rates, limits and rules change; always confirm on the official website or with a qualified advisor before you act. Spotted something that needs updating? Let us know.
