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MUDRA loan: Shishu, Kishore and Tarun explained
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A MUDRA loan is a collateral-free loan of up to ₹10 lakh, given to micro and small non-corporate businesses outside agriculture, under the Pradhan Mantri MUDRA Yojana (PMMY). MUDRA means Micro Units Development and Refinance Agency. The scheme was launched on 8 April 2015.
What MUDRA actually is
MUDRA does not lend to you directly. It is a refinance agency, set up as a subsidiary of SIDBI, and the loans come from banks, regional rural banks, small finance banks, microfinance institutions and NBFCs that have signed up. MUDRA supports them with refinance and credit guarantee. Loans are for income-generating activities such as shops, small manufacturing units, food stalls, repair services, transport vehicles and allied activities.
The three categories
| Category | Loan size at launch |
|---|---|
| Shishu | Up to ₹50,000 |
| Kishore | ₹50,001 to ₹5 lakh |
| Tarun | ₹5 lakh to ₹10 lakh |
The names mean infant, adolescent and young adult, and show the stage of the business. The Union Budget 2024-25 announced a higher limit of up to ₹20 lakh, often called Tarun Plus, for entrepreneurs who have taken Tarun loans earlier and repaid them well. Confirm current limits at mudra.org.in.
Other features
- No collateral is demanded for these loans.
- Borrowers can get a MUDRA card, a RuPay debit card for working capital withdrawals.
- Loans count towards priority sector lending for banks.
- Interest rates are set by the lending institution and are not fixed by MUDRA.
Example
A tailor in Madurai needs ₹40,000 for two machines and fabric. She applies to her bank under Shishu. A woman who runs a small bakery and wants ₹3 lakh for an oven and a delivery van would fall under Kishore.
How bank exams ask about it
Questions test the full form, the launch date, who is the refinancing agency, the three category names and limits, and whether collateral is needed. The pattern "MUDRA is a subsidiary of" has SIDBI as the answer. Compare with the scheme for women and SC/ST entrepreneurs in Stand-Up India. The wider list is in banking awareness.
Frequently asked questions
Can I get a MUDRA loan for farming?
Not for crop cultivation, which is covered by schemes like the Kisan Credit Card. Allied activities such as poultry or dairy may qualify under certain rules.
Where do I apply?
At the branch of a bank, RRB, small finance bank, MFI or NBFC participating in the scheme, or through the online application portal listed on the MUDRA site.
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- Stand-Up IndiaStand-Up India supports SC, ST and women entrepreneurs with bank loans from ten lakh to one crore rupees for a new business. Features and exam facts.
- SIDBISIDBI is the principal financial institution for MSME financing. Full form, 1990 formation, refinance, fund of funds, MUDRA link and how banking exams ask it.
- Financial inclusionFinancial inclusion means affordable banking, credit, insurance and pensions for low-income and rural people. Tools, schemes and how exams ask it.
- Priority sector lendingPriority sector lending makes banks lend a set share of credit to farming, MSMEs, housing, education and more. Categories, targets and PSLCs.
- NBFCAn NBFC is a company that lends and invests like a bank but cannot take demand deposits. Meaning, types, scale-based regulation and bank differences.
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