The Pradhan Mantri Mudra Yojana (PMMY) has completed 10 successful years in 2025. Started in April 2015, this scheme has helped crores of people in villages, small towns, and cities by giving them financial help to start or grow small businesses. The scheme is a big step towards making people self-reliant and promoting entrepreneurship in India.
Now, after ten years, the government has expanded this scheme even further. In Budget 2025, the loan limit under Mudra Yojana has been increased from Rs.10 lakh to Rs.20 lakh. This change is expected to help more people start or grow their businesses without the tension of giving any guarantee or collateral.
What Is Pradhan Mantri Mudra Yojana?
Mudra Yojana is a loan scheme of the Government of India that provides business loans without any security. It is specially designed for small traders, shopkeepers, women entrepreneurs, and micro business owners. The loans are provided through banks, NBFCs, and micro-finance institutions.
Under this scheme, people can take loans in three main categories:
- Shishu Loan – Loan up to Rs.50,000
- Kishore Loan – Loan from Rs.50,000 to Rs.5 lakh
- Tarun Loan – Loan from Rs.5 lakh to Rs.20 lakh (Earlier this was up to Rs.10 lakh)
Now, a new sub-category Tarun Plus has also been introduced to give further support to growing businesses that have already used and repaid earlier Mudra loans.
Vision Behind Mudra Yojana
The government wants to create an inclusive financial environment through Mudra Yojana. The focus is on:
- Empowering the lowest section of society.
- Supporting small business owners.
- Helping people become self-employed.
- Encouraging local job creation.
By giving loans without any guarantee, the scheme removes a major barrier for people who want to start their own business but don’t have enough money or assets.
Loan Limit Now Increased to Rs.20 Lakh
One of the biggest updates in 2025 is the increase in the maximum loan limit under the scheme. Traders and entrepreneurs can now get up to Rs.20 lakh under the Tarun and Tarun Plus categories.
This update will help many existing small business owners to scale their work, buy new machinery, open new branches, or hire more staff.
The interest subsidy continues as earlier — a 2% discount on the interest rate for loans up to Rs.50,000 is available to all eligible applicants.
27 Small Businesses You Can Start with Mudra Loan
The government provides support to start or grow these businesses under the scheme:
- Flour Mill
- Soap Making Unit
- Tomato Sauce Manufacturing
- Chivda and Roasted Grains Production
- Banana Fibre Products
- Computer Assembling
- Nut-Bolt, Washer, and Rivet Manufacturing
- Metal-Based Units
- Paper Cup Manufacturing
- Rice Powder and Curry Powder Making
- Bakery Business (Biscuits and Cakes)
- Steel Furniture Manufacturing
- Dry Coconut Powder Unit
- Footwear and Slipper Making
- Wooden Furniture Making
- Paper Napkin Manufacturing
- Papad Manufacturing
- Ready-Made Garments Unit
- Pickle Business
- Palm Plate Unit
- Notebook and Copy Making
- Milk-Based Dairy Products
- Detergent Powder and Soap Making
- Sanitary Napkin Production
- General Engineering Workshop
- Rubber Mattress Unit
- Beauty Parlour Setup
Who Can Apply for a Mudra Loan?
Anyone who is an Indian citizen and wants to:
- Start a new business
- Expand an existing business
- Buy equipment or raw materials
- Hire staff or open another outlet
They can apply for a Mudra loan under the PMMY scheme. People from SC, ST, OBC, and women entrepreneurs are encouraged and sometimes get preference.
Documents Needed for Mudra Loan Application
To apply for the Mudra loan, you need to submit the following documents:
- Identity proof (Aadhaar Card, Voter ID, PAN)
- Residence proof (Electricity bill, Ration Card, etc.)
- Passport size photos (2)
- Proof of business or business idea
- Details of place where business will run
- Caste certificate if applicable (SC/ST/OBC)
- Bank account details
- Business address proof
- Machinery or raw material details (if any)
Step-by-Step Guide to Apply for Mudra Loan
Step 1: Download the Form
Go to the official Mudra website: www.mudra.org.in
- Download the form for the loan category you are applying for:
- Shishu
- Kishore
- Tarun / Tarun Plus
Step 2: Fill in the Form
- Fill all details like your name, mobile number, address, Aadhaar, PAN, etc.
- Give proper information about your business or idea.
- Attach all necessary documents.
Step 3: Submit at Bank Branch
- Visit any public sector bank, private bank, rural bank, or cooperative bank.
- Submit the filled form and documents.
- Bank manager may ask you some questions about your plan.
- If satisfied, the loan will be sanctioned and amount will be credited to your account.
Where Can You Get a Mudra Loan?
Mudra loans are available from:
- State Bank of India (SBI)
- Punjab National Bank (PNB)
- Bank of Baroda
- ICICI Bank
- HDFC Bank
- Axis Bank
- Canara Bank
- Union Bank
- Regional Rural Banks (RRBs)
- Small Finance Banks
- NBFCs and Micro Finance Institutions
Visit your nearest branch or check the official website for the list of participating banks.
What Is the Interest Rate?
There is no fixed interest rate under Mudra Yojana. It depends on:
- Type of business
- Risk level
- Bank’s own lending rate
Generally, banks charge around 12% per year. But some banks may charge less or more depending on the applicant and business.
For small loans up to Rs.50,000, the government gives a 2% interest subsidy, which means the effective interest rate will be lower.
Why Mudra Yojana Is a Game-Changer for Youth and Rural India
Mudra Yojana has played a major role in empowering India’s youth, especially in rural and semi-urban areas. Those who had no jobs or limited income opportunities are now running small shops, manufacturing units, and service centres.
This scheme has not only helped in earning income but also boosted self-confidence and respect in society.
It is also helping in promoting ‘Make in India’, ‘Atmanirbhar Bharat’, and ‘Digital India’ movements, as most Mudra loan-supported businesses use local products and digital tools.
