Any Citizen of India with a business plan for a non-farm income-generating activity such as manufacturing, processing, trading, or the service sector and a credit requirement of up to ten lakh rupees can apply for MUDRA loans through a bank, a microfinance institution, or a non-bank financial institution.

Assists you in meeting your company’s working capital requirements. This loan, which is part of the Pradhan Mantri Jan-Dhan Yojana, also offers an Rs. 5000 overdraft facility. One can also apply for a MUDRA debit card, which offers rapid and easy access to funds.

Mudra Loan Procedure

Here is the 3 step procedure to get a MUDRA loan

  • Make sure you have all of the necessary papers. Your identification
  • The most significant documents you’ll need are proof of identity, proof of domicile, and proof of business.
  • Fill out an application at a MUDRA-accredited lender.
  • Submit all necessary paperwork.

MUDRA’s distribution channel is envisioned as a refinancing route primarily to NBFCs and MFIs, as well as other intermediaries such as banks and Primary Lending Institutions.

The ground-level distribution route must also be built and extended at the same time. In this setting, there are already a significant number of “Last Mile Financiers” in the shape of companies, trusts, organisations, associations, and other entities that offer informal funding to small businesses.

Following consultations with stakeholders, it was decided that this informal delivery channel, which already existed on the ground and was capable of lending and collecting from the target sector, needed to be legalised and exploited.

The MUDRA Bank’s financing architecture would therefore be geared at integrating these “last mile financiers” into the formal delivery channel through intermediaries such as NBFCs / NBFC – MFIs as well as Non-Corporate MFIs.

It is also necessary to identify the bankers who serve the local credit demands in India’s small villages and cities. Efforts will be made to improve their skills so that they can grow in size, expand their scope of operations, and lower their financing costs over time.

This would allow them to increase their lending capacity in this industry while decreasing their funding expenses. As a result, one of the most serious issues confronting MUDRA is integrating them into its financial architecture and acknowledging the legitimate role that they have long played in the provision of credit in local markets.

Furthermore, one of MUDRA’s primary initiatives should be to reignite entrepreneurship by developing financial sector organizations that would give worthy entrepreneurs quick and creative access to loans without any complicated processes.

The above would be a multi-tier arrangement/intermediation, and developing a suitable delivery architecture for this route, including requirements such as a system of registration for last-mile financiers, instilling responsible lending and collection practises among them, maintaining efficiencies in the cost of delivery at different tiers/levels, and developing a standardized set of covenants governing last mile lending, would be taken up.

While the intermediaries to be refinanced by MUDRA Bank will initially be existing NBFCs/MFIs, the channel is expected to result in the creation of an enabling ecosystem for a new type of financial intermediary known as “Small Business Finance Companies” that will specialise in this segment as it becomes more formalised and thus attract more capital.

MUDRA’s delivery system, which will be implemented in conjunction with intermediaries, will be centred on technology. For last-mile delivery, mobile technology has immense promise.