By Sharda Associates | CA Firm, Bhopal, Madhya Pradesh, India
You Want to Know the Real Mudra Loan Rate Before You Apply
Most small business owners apply for a Mudra loan at whichever bank they have an account with—without comparing rates. This one mistake costs them Rs.40,000 to Rs.75,000 in extra interest over the loan tenure.
Sharda Associates is a CA firm based in Bhopal, Madhya Pradesh, India. Our CA team prepares CA-certified business plans and project reports for Mudra loan applications across India. We have helped over 45,500 businesses get their loan documentation right. A well-prepared CA-certified business plan gets you a rate toward the lower end of the bank’s Mudra rate band. Call +91 89899 77769. Documentation starts at Rs.2,999, delivered in 24 to 48 hours.
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Mudra Loan Categories and Current Interest Rates 2026
The Mudra loan ceiling was raised from Rs.10 lakh to Rs.20 lakh in the Union Budget 2024-25 through the new Tarun Plus category. Four categories now exist under PMMY—each with different rate bands across lenders. Sharda Associates
| Category | Loan Amount | Purpose |
| Shishu | Up to Rs.50,000 | Micro-businesses starting out |
| Kishore | Rs.50,001 to Rs.5 lakh | Growing businesses needing equipment |
| Tarun | Rs.5,00,001 to Rs.10 lakh | Established micro enterprises expanding |
| Tarun Plus | Rs.10,00,001 to Rs.20 lakh | Businesses with successful repayment history |
Public Sector Bank Rates
Public sector banks generally offer lower Mudra loan rates compared to private banks. SBI and PNB typically offer the most competitive rates around 9.5 to 10 percent for reliable borrowers.
| Bank | Shishu | Kishore | Tarun | Tarun Plus |
| SBI | 8.85% to 9.75% | 9.75% to 10.75% | 10.25% to 11.50% | 11.00% to 12.00% |
| PNB | 9.40% to 10.00% | 9.75% to 10.50% | 10.00% to 11.25% | 11.00% to 12.50% |
| Bank of Baroda | 9.15% to 10.25% | 9.75% to 11.00% | 10.25% to 11.50% | 11.25% to 12.50% |
| Canara Bank | 9.25% to 10.50% | 10.00% to 11.25% | 10.50% to 12.00% | 11.50% to 13.00% |
| Union Bank | 9.00% to 10.25% | 9.75% to 11.00% | 10.50% to 12.00% | 11.50% to 13.00% |
| Bank of Maharashtra | 9.15% to 10.25% | 9.90% to 11.00% | 10.50% to 12.00% | 11.50% to 13.00% |
| Indian Bank | 9.25% to 10.50% | 10.00% to 11.25% | 10.50% to 12.00% | 11.50% to 13.00% |
| UCO Bank | 9.50% to 10.75% | 10.25% to 11.50% | 10.75% to 12.25% | 11.75% to 13.25% |
Private Bank and NBFC Rates
HDFC Bank and ICICI Bank are known for quicker digital processing and e-Mudra facilities, though their rates may be 1 to 2 percent higher than public sector banks.
| Lender | Shishu | Kishore | Tarun | Processing |
| HDFC Bank | 10.00% to 12.50% | 10.75% to 13.00% | 11.50% to 14.00% | 0.50% to 1.00% |
| ICICI Bank | 10.25% to 12.75% | 11.00% to 13.25% | 12.00% to 14.50% | 0.75% to 1.50% |
| Axis Bank | 10.50% to 13.00% | 11.25% to 13.50% | 12.25% to 15.00% | 1.00% to 2.00% |
| Lendingkart | 15% to 27% | 18% to 30% | 20% to 30% | 2% to 3% |
Important: Rates change with RBI repo rate revisions. Always confirm current rate directly with your bank before applying.
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What Determines Your Personal Mudra Loan Rate
Banks do not offer a single fixed rate. Every borrower lands somewhere within a rate band. Six specific factors determine where you land — and understanding them lets you take action before applying.
CIBIL Score Impact
Your credit score is the single biggest individual rate factor.
| CIBIL Score | Rate Impact |
| Above 750 | Best rate — lower end of band |
| 700 to 750 | Standard rate — mid-range |
| 650 to 700 | Higher rate — upper end of band |
| Below 650 | Most banks decline or NBFC referral |
Other Factors That Affect Your Rate
Banking Relationship
Existing account holders at a bank consistently get better rate treatment. If you have had a salary or savings account at SBI for 5 years with clean transactions — your Mudra rate at SBI will be lower than at a bank you have never banked with.
Documentation Quality
Banks have pricing discretion within their rate bands. Borrowers who submit CA-certified business plans demonstrating clear repayment capacity receive rates toward the lower end. This is the most actionable factor — because you control it before you apply.
Gender Concession
Women entrepreneurs receive concessional rates with nominal processing fees under the Mudra scheme. Most PSU banks offer 0.25 to 0.50 percent rate concession to women borrowers. Always claim this explicitly at the time of application.
Udyam Registration
Udyam Registration has become a mandatory requirement for most lenders in 2026. Active Udyam Registration improves processing speed and in many cases earns better rate treatment.
How to Get the Lowest Available Rate
The difference between the highest and lowest Mudra rate available in 2026 is 3 to 5 percent per annum. On a Rs.5 lakh loan over 5 years that means Rs.40,000 to Rs.75,000 in avoidable interest. These five steps reduce your rate before you apply.
Five Steps to Lower Your Rate
Step 1 — Check your CIBIL score at cibil.com. Address specific negative entries before applying. Even one month of clean payment history helps.
Step 2 — Get Udyam Registration if you do not have it. Free, online, takes one day, strengthens every element of your application.
Step 3 — Prepare a CA-certified business plan showing monthly revenue, expenses, and EMI repayment surplus clearly. This is the most controllable factor for rate improvement.
Step 4 — Apply at the bank where you have the strongest existing relationship — longest account history, cleanest transaction record.
Step 5 — Apply through Udyamimitra portal at udyamimitra.in to reach multiple lenders simultaneously. Compare offers and negotiate with your preferred bank using a competing offer.
EMI Reference Table
| Loan Amount | Rate | 3-Year EMI | 5-Year EMI |
| Rs.1 lakh | 10% | Rs.3,227 | Rs.2,125 |
| Rs.3 lakh | 10% | Rs.9,682 | Rs.6,374 |
| Rs.5 lakh | 10.5% | Rs.16,333 | Rs.10,747 |
| Rs.10 lakh | 11% | Rs.32,739 | Rs.21,742 |
| Rs.20 lakh | 12% | Rs.66,429 | Rs.44,489 |
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Conclusion
Mudra loan rates in 2026 range from below 9 percent at the best public sector banks for strong borrowers to above 25 percent at fintech lenders. The rate you receive is not fixed — it depends on your credit profile, banking relationship, and documentation quality.
The most actionable steps are clear. Maintain your CIBIL above 700. Get Udyam Registration. Prepare a CA-certified business plan. Apply at a bank where you have an existing relationship. Apply for the category that genuinely covers your requirement.
At Sharda Associates our CA team prepares Mudra loan business plans that earn rate treatment toward the lower end of the applicable band — for businesses across all states of India. Call or WhatsApp +91 89899 77769
Frequently Asked Questions
1. What is the lowest Mudra loan rate in 2026? SBI offers the lowest Mudra rates — starting at 8.85 percent for Shishu loans and 9.75 percent for Kishore loans for borrowers with strong credit history and existing SBI account relationship.
2. Which bank is best for Mudra loan in 2026? SBI and PNB offer the lowest rates for most categories. HDFC Bank and ICICI Bank offer faster digital processing but at 1 to 2 percent higher rates. For women entrepreneurs — Bank of Maharashtra has strong women-focused Mudra programmes.
3. Is there a processing fee for Mudra loans? Public sector banks charge nil to 0.50 percent processing fee. Private banks charge 0.50 to 2 percent. Women entrepreneurs at most PSU banks receive nil processing fee treatment under specific Mudra schemes.
4. What is the Mudra Tarun Plus category? Tarun Plus is a new category introduced in October 2024 for loans from Rs.10 lakh to Rs.20 lakh. It is available specifically to micro businesses that have already successfully repaid an earlier Mudra loan under any category.
5. Do women get lower Mudra rates? Yes. Women entrepreneurs receive 0.25 to 0.50 percent rate concession with nil to nominal processing fees at most public sector banks under the Mudra scheme. This benefit must be explicitly claimed at the time of application.
6. Can I get a Mudra loan without a CIBIL score? Some banks process Mudra Shishu applications for borrowers with no credit history through alternate assessment. No active default is the essential requirement. A clean CIBIL with no history is different from one with adverse entries.
7. Does a good business plan reduce my Mudra interest rate? Yes — within the bank’s rate band. Banks have pricing discretion between the floor and ceiling. Borrowers with professionally prepared CA-certified business documentation consistently receive rates toward the lower end of the band.
8. What is the maximum repayment tenure for a Mudra loan? Most banks offer up to 5 years repayment tenure. Some offer 3 to 7 years depending on loan category and business type. Longer tenure reduces monthly EMI but increases total interest paid over the loan life.
9. Is Udyam Registration mandatory for Mudra loan? Most lenders now require active Udyam Registration as a mandatory document. It is free, takes one day to obtain online at udyamregistration.gov.in, and strengthens your application materially.10. How do I compare Mudra rates across multiple banks? Apply through the Udyamimitra portal at udyamimitra.in. This routes your single application to multiple empanelled lenders simultaneously. Compare offers received before committing to any lender.
