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While India’s MSME and SME sectors continue to contribute substantially to the country’s GDP, the industry underwent recent progress owing to increased awareness, better opportunities and digital advancements. Post GST and demonetisation rollout, these enterprises experienced a revenue surge of about 27% and witnessed a profit growth of 66% towards the later stages of FY 2017-18. In an attempt to further boost the progress of these industries, the Central Government launched its flagship scheme Pradhan Mantri Mudra Yojana or PMMY.
This scheme aimed to ‘fund the unfunded’ – the non-corporate, non-farm small/micro-enterprises. Via this program, small business entities involved in manufacturing, trading and service sectors were extended the facility of institutional finance.
Important credit schemes under Mudra Yojana
- Women Enterprise Programme
This credit scheme is targeted, especially at individual and Joint Liability Groups and Self-Help Groups women entrepreneurs. Under such programmes, particular concession like reduction in rates of interest (up to 0.25%) on the granted loan amount is offered.
- Credit Guarantee Fund
Managed by the National Credit Guarantee Trustee Company Ltd, this scheme comprises of the creation and use of a special fund – Credit Guarantee Fund for Micro Units (CGFMU). IT allows eligible applicants to avail microloans conveniently.
- Mudra Card overdraft
In addition to allowing debit transactions, this card enables users to withdraw from ATMs, allows the cash-credit arrangement to access working capital finance, and make the most of overdraft facilities.
- Micro Credit Scheme
Under this, financial aid is extended via the Micro Financial Institutions (MFIs) to an amount capped at Rs. 1 Lakh as business loans to those employed in the micro-enterprises, self-help groups, and joint-liability groups.
- Equipment Finance Scheme
This scheme offers convenient access to funding the purchase or updating of equipment or machinery. It boosts the affordability of technical advancements and helps in the smooth functioning of a business.
Following such beneficial features and schemes, multiple SMEs and MSMEs are now applying for this scheme that would help them have access to flexible funding. This fund so acquired can be used to finance various aspects of their business and hence, expand the same if one knows the following essential Pradhan Mantri Mudra Yojana details.
Required eligibility criteria
While the sanctioned number of PM Mudra Yojana loans sanctioned reached 59870318 by the financial year 2019, applying and availing the same has been made convenient with these easy-to-meet eligibility criteria. The required eligibility depends on the products offered under this scheme –
The sanctioned sum under this product is capped at Rs. 50,000 and is offered to the seed business enterprises or one which is about to be established. It requires applicants to have –
- Quotation of the machine or other items to be purchased
- Details of the equipment
- Detailed information about the machinery supplier
It includes advances that are offered to entrepreneurs looking for add-on funds to expand their trade and is capped at Rs. 5 Lakh. Applicants for this loan need to have –
- Income/sales return
- Estimated balance sheet for the duration of the loan
- Last 2 years balance sheet, etc.
Under this scheme of loan arrangement, business owners can avail up to Rs. 10 Lakh if they meet the following criteria –
- Caste certificate – SC, ST, OBC, etc.
- Address proof
- ID proof, apart from those in the Kishor loan
Thus, knowing what is Mudra Yojana and availing the same offers borrowers with the benefit of having convenient access to funds that would help them in their business ventures. However, considering the current cost of machinery and leasing office space, borrowers establishing their business might face a financial deficit with a maximum loan amount of Rs. 10 lakh from this scheme.
Subsequently, multiple NBFCs, in an attempt to help entrepreneurs meet this widening financial gap, offer their business advances that come with a substantial credit amount. Approaching reputed financial lenders like Bajaj Finserv and availing their Business Loan help entrepreneurs gain convenient access to a loan amount of up to Rs. 30 Lakh.
While knowing the Mudra Yojana details is essential to avail finances for entrepreneurs, those with the requirement of a lump sum funding amount need to approach NBFCs and seek their financial aid that comes with an extended repayment tenor.
ADditional Read: Benefits of business financing by Bajaj Finserv