🗓️Last Updated: June 2026

MUDRA Loan 2026: ₹10 Lakh Business Loan — Apply, Eligibility & Banks

MUDRA (Micro Units Development and Refinance Agency) Loan under the Pradhan Mantri Mudra Yojana (PMMY) provides collateral-free loans up to ₹10 lakh for small businesses, self-employed individuals, and micro entrepreneurs. Three categories — Shishu, Kishore, and Tarun — cater to different stages of business growth.

🔗mudra.org.in — Official Portal →

📋 Overview

Pradhan Mantri Mudra Yojana (PMMY) was launched in April 2015 to provide affordable credit to micro and small enterprises that lack access to formal banking. Under this scheme, MUDRA (Micro Units Development and Refinance Agency) provides refinancing to banks, NBFCs, and MFIs who in turn lend to small business owners. MUDRA loans are available in three categories based on the stage of business development: • Shishu: Loans up to ₹50,000 — for new or very small businesses just starting out • Kishore: Loans from ₹50,001 to ₹5 lakh — for established micro businesses needing growth capital • Tarun: Loans from ₹5 lakh to ₹10 lakh — for mature micro enterprises with expansion plans No collateral or third-party guarantee is required for MUDRA loans. The loan can be used for working capital, equipment purchase, business expansion, or setting up a new micro enterprise. As of 2026, over 45 crore loans worth more than ₹27 lakh crore have been sanctioned under PMMY.

✅ Eligibility

  • ✓Any Indian citizen who is 18 years or older and wishes to set up or expand a non-farm micro/small enterprise
  • ✓Sole proprietors, partnership firms, micro manufacturing units, shopkeepers, artisans, traders, service sector units
  • ✓Self-employed professionals such as beauticians, tailors, mechanics, plumbers, electricians, and other skilled workers
  • ✓Vendors and street vendors operating small businesses
  • ✓Agriculture-allied activities such as poultry, fishing, beekeeping, and food processing are also eligible
  • ✓Applicant must not be a defaulter on any existing bank loan
  • ✓There is no minimum income requirement — but the business plan must demonstrate repayment capacity
  • ✓Women entrepreneurs get priority and lower interest rates at many banks
  • ✓SC/ST/OBC entrepreneurs may get additional benefits or lower rates under government schemes

📁 Documents Required

▸Identity proof: Aadhaar card, PAN card, Voter ID, or Passport
▸Address proof: Aadhaar, utility bill, ration card, or bank statement
▸Business proof: Shop registration, GSTIN, trade licence, or Udyam registration certificate
▸Business plan or project report (required for Kishore and Tarun categories)
▸Recent passport-size photographs (2–3 copies)
▸Bank statement of the last 6 months (for existing businesses)
▸Caste certificate (if applying under SC/ST/OBC category for preferential rates)
▸Quotation for equipment or machinery to be purchased (if applicable)
▸Partnership deed / company registration documents (if applicable)

💰Fees & Processing Time

Fee
No processing fee for Shishu loans. Kishore and Tarun loans may have a nominal processing fee (typically 0.5% of loan amount) depending on the lending institution. Interest rates range from 8.5% to 12% per annum depending on the bank and loan category — set by the lending institution, not MUDRA directly.
Processing Time
Shishu loans: 7–15 working days. Kishore and Tarun loans: 15–30 working days depending on the bank and documentation. Applications through public sector banks may take longer than private banks or NBFCs. For faster processing, apply through PSB Loans in 59 Minutes portal (psbloansin59minutes.com).

🖥️ How to Apply Online

  1. 1Download the MUDRA loan application form from mudra.org.in or your bank's website
  2. 2For fast processing, apply at psbloansin59minutes.com — get in-principle approval in 59 minutes from public sector banks
  3. 3On the PSB Loans portal: register with PAN and mobile number, fill in business details, upload GST returns, IT returns, and bank statements
  4. 4Get in-principle sanction letter and carry it to the bank branch for final processing
  5. 5Alternatively, apply directly on the bank's net banking or mobile app (most major banks have MUDRA loan sections)
  6. 6Select the MUDRA loan product matching your requirement (Shishu/Kishore/Tarun)
  7. 7Upload all required documents online
  8. 8Track application status on the bank portal or app
  9. 9For Kishore/Tarun: bank may call you for document verification and business inspection
  10. 10Upon approval, loan amount is credited to your linked bank account

🏢 How to Apply Offline

  1. 1Visit any scheduled commercial bank, regional rural bank (RRB), small finance bank, NBFC, or MFI branch near you
  2. 2Ask specifically for a MUDRA loan / PMMY loan — mention whether you want Shishu, Kishore, or Tarun
  3. 3Collect the MUDRA loan application form from the branch
  4. 4Fill in personal details, business details, and loan amount required
  5. 5Attach all required documents (copies with originals for verification)
  6. 6Submit to the bank manager or loan officer
  7. 7Bank may visit your business premises for verification (for Kishore and Tarun)
  8. 8On approval, sign the loan agreement and collect the MUDRA Rupay Debit Card issued with working capital loans
  9. 9For new businesses without an account, you must first open a savings/current account at the bank

⚠️Common Problems & Solutions

✗MUDRA loan application rejected by bank
→Banks can reject applications due to low CIBIL score, poor business viability, or incomplete documentation. Ask the bank for the specific reason. Common fixes: improve CIBIL score (pay outstanding dues), provide a stronger business plan, add a co-applicant with better credit, or try a different bank or NBFC.
✗Bank asking for collateral — isn't MUDRA collateral-free?
→MUDRA loans up to ₹10 lakh are indeed collateral-free (covered under MUDRA/CGFMU guarantee). If a bank asks for collateral, politely point out that PMMY guidelines do not require it. Escalate to the bank's regional office or contact the MUDRA helpline if the bank continues to insist on collateral for loans up to ₹10 lakh.
✗No response from bank after submitting application
→Under RBI guidelines, banks must process and respond to MUDRA loan applications within a reasonable time. If you have not received a response in 30 days, escalate to the bank's grievance cell. You can also apply at a different bank simultaneously. The PSB Loans in 59 Minutes portal gives faster in-principle approval.
✗How to repay MUDRA loan — what if I face difficulty?
→Repayment is through monthly EMIs to the lending bank. If you face repayment difficulty, contact your bank immediately for restructuring or moratorium. Banks are required to consider genuine hardship cases. Do not default silently — contact the bank and explore EMI revision, loan restructuring, or emergency credit support under MSME schemes.
✗I don't have a business yet — can I still apply?
→Yes, for Shishu loans (up to ₹50,000) you can apply even for a new business. You need to present a basic business idea/plan. However, many banks prefer applicants with at least 6 months to 1 year of business history for Kishore and Tarun loans. For new businesses, start with Shishu and upgrade to Kishore after establishing a track record.

❓ Frequently Asked Questions

Q.What is the difference between Shishu, Kishore, and Tarun MUDRA loans?

Shishu covers loans up to ₹50,000 for micro businesses just starting out. Kishore covers loans between ₹50,001 and ₹5 lakh for established micro businesses needing growth capital. Tarun covers loans between ₹5 lakh and ₹10 lakh for mature enterprises with expansion plans. The category determines the loan amount — all three are collateral-free under PMMY.

Q.Which banks give MUDRA loans?

All scheduled commercial banks (SBI, PNB, Bank of Baroda, Canara Bank, HDFC, ICICI, Axis, etc.), regional rural banks (RRBs), small finance banks, NBFCs, and Microfinance Institutions (MFIs) participate in PMMY. Public sector banks (PSBs) tend to offer lower interest rates. The full list of lending institutions is at mudra.org.in.

Q.What is the interest rate on MUDRA loans?

MUDRA itself does not fix interest rates — each lending institution sets its own rates. Typically, Shishu loans range from 8.5% to 10%, Kishore from 9% to 11.5%, and Tarun from 10% to 12% per annum. Women entrepreneurs and SC/ST applicants may get a 0.25–0.5% concession at many banks.

Q.Can I use MUDRA loan for agriculture?

Pure agricultural activities (crop cultivation) are not covered under MUDRA. However, allied agricultural activities — food processing, agri-trading, dairy, poultry, bee-keeping, fisheries, and agri-service enterprises — are eligible for MUDRA loans.

Q.What is the MUDRA Rupay Card?

For working capital MUDRA loans, banks issue a MUDRA Rupay Debit Card (similar to a credit line) that you can use to withdraw money as needed, up to the sanctioned working capital limit. This avoids the need to withdraw the full loan amount at once. Repayment is on the outstanding amount used.

Q.Is Udyam registration mandatory to get a MUDRA loan?

Udyam registration is not mandatory to apply for a MUDRA loan, but it is strongly recommended. Udyam registration (free at udyamregistration.gov.in) classifies you as a Micro/Small enterprise and helps in getting better loan terms, priority sector benefits, and government subsidies. Many banks ask for it for Kishore and Tarun loans.

Q.Can I apply for MUDRA loan online without visiting a bank?

Yes. The fastest way is through psbloansin59minutes.com — you can get in-principle approval in minutes from public sector banks. Several banks (SBI, PNB, Bank of Baroda) also allow full online application through their net banking portals. Final disbursement requires a brief bank visit for document submission and KYC.

Q.How much CIBIL score do I need for a MUDRA loan?

For Shishu loans (up to ₹50,000), many banks do not require a CIBIL score, especially for first-time borrowers and new micro enterprises. For Kishore and Tarun loans, a CIBIL score of 650+ is generally preferred. A higher score (700+) improves your chances and may get you better interest rates. If you have no CIBIL history, some banks will still lend based on business viability.

📞Helpline & Support

  • ▸MUDRA Helpline: 1800-180-1111 (toll-free)
  • ▸PSB Loans in 59 Minutes (online MUDRA): psbloansin59minutes.com
  • ▸Udyam Registration (for MSME registration): udyamregistration.gov.in
  • ▸Nearest bank branch: Contact any PSU bank (SBI, PNB, Bank of Baroda, Canara Bank, etc.), private bank, RRB, or NBFC
  • ▸Grievance: mudra.org.in → Contact Us, or register complaint at cms.rbi.org.in
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Disclaimer: NagrikIQ is an informational platform and is not affiliated with any government department. Information provided is for guidance only. Always verify details on the official government portal before taking action.