TL;DR - Mudra Loan 2026 Quick Summary
--> Collateral-free business loans up to Rs 20 lakh under Pradhan Mantri Mudra Yojana (PMMY)
--> Four categories: Shishu (up to Rs 50K), Kishore (up to Rs 5L), Tarun (up to Rs 10L), Tarun Plus (up to Rs 20L)
--> Interest rates range from 8.85% to 16% p.a. depending on bank and category
--> 52+ crore loans worth Rs 32.61 lakh crore disbursed in 10 years
--> 69% of all Mudra accounts are held by women entrepreneurs
Rs 20L
Max Loan (Tarun Plus)
0%
Collateral Required
52 Cr+
Loans Disbursed
69%
Women Borrowers
Table of Contents
2. Mudra Loan Categories - Shishu, Kishore, Tarun, Tarun Plus
4. Interest Rates in 2026 (Bank-Wise)
6. How to Apply Online and Offline
8. Eligible Business Activities
1. What is Mudra Loan (PMMY)?
The Pradhan Mantri Mudra Yojana (PMMY), commonly known as the Mudra Loan scheme, is a Government of India initiative launched on 8th April 2015 to provide collateral-free loans to micro and small businesses. The scheme is operated through MUDRA (Micro Units Development and Refinance Agency Ltd.), which works under SIDBI.
The core idea is simple: fund the unfunded. Millions of small entrepreneurs in India -- street vendors, kirana shop owners, tailors, salon operators, food stall owners, artisans -- were shut out of formal credit because they could not provide collateral or had no credit history. Mudra Loan changed that.
Mudra loans are disbursed through Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks, NBFCs, and Micro Finance Institutions (MFIs). MUDRA itself does not lend directly to borrowers -- it acts as a refinancing agency for the lending institutions.
10-Year Milestone (April 2025)
PMMY completed 10 years in April 2025 with over 52 crore loans worth Rs 32.61 lakh crore sanctioned since inception. In FY 2024-25 alone, nearly 4.79 crore loans amounting to Rs 5.02 lakh crore were sanctioned. SBI leads all public sector banks in Mudra disbursement.
2. Mudra Loan Categories - Shishu, Kishore, Tarun, Tarun Plus
Mudra loans are classified into four categories based on the stage of business and funding requirement. The 2024 Union Budget introduced the new Tarun Plus category, effective from 24th October 2024, raising the maximum limit to Rs 20 lakh for repeat borrowers.
| Category | Loan Amount | Target | Typical Rate |
|---|---|---|---|
| Shishu | Up to Rs 50,000 | New / early-stage businesses | 10-12% p.a. |
| Kishore | Rs 50,001 - Rs 5 lakh | Growing businesses | 11-15% p.a. |
| Tarun | Rs 5,00,001 - Rs 10 lakh | Established micro enterprises | 12-16% p.a. |
| Tarun Plus (NEW) | Rs 10,00,001 - Rs 20 lakh | Repeat Tarun borrowers (repaid) | Bank-specific |
Important Note
Tarun Plus is only available to borrowers who have successfully repaid a previous Tarun category loan. First-time applicants cannot directly apply for Tarun Plus. The Credit Guarantee Fund for Micro Units (CGFMU) provides guarantee coverage for these enhanced loans as well.
Mudra loans can be availed as Term Loans (for buying machinery, equipment, or capital assets with EMI repayment over 3-7 years), Working Capital Loans (cash credit or overdraft for day-to-day business expenses), or through the Mudra Card (a RuPay debit card linked to the working capital account).
3. Eligibility Criteria
Mudra Loan eligibility is straightforward and designed to be inclusive. Here is who can apply:
| Parameter | Requirement |
|---|---|
| Citizenship | Indian citizen |
| Age | 18 to 65 years |
| Business Type | Non-corporate, non-farm small/micro enterprise |
| Applicant Type | Individual, Proprietorship, Partnership, Pvt Ltd, Public Ltd, or any legal entity |
| Sector | Manufacturing, Trading, Services, or Agri-allied activities |
| Credit History | No active defaults or NPA with any bank |
| Collateral | Not required (100% collateral-free) |
| CIBIL Score | Not mandatory for Shishu; 650+ preferred for Kishore/Tarun |
Who Cannot Apply
Direct farming or crop cultivation is not covered. Large corporates and businesses with turnover above the MSME threshold are not eligible. Applicants who are current bank defaulters or have been flagged under CIBIL/Equifax will face rejection. The loan funds must strictly be used for business purposes -- not personal expenses.
4. Interest Rates in 2026 (Bank-Wise Comparison)
Mudra Loan interest rates are not fixed by the government. Each lending institution sets its own rate based on MCLR, credit profile, business vintage, and risk assessment. Here is a comparative view for 2026:
| Bank / Institution | Interest Rate (Approx.) | Processing Fee | Best For |
|---|---|---|---|
| SBI | 9.50% - 11.50% | Nil - 0.50% | Shishu loans, lowest rates |
| PNB | 9.50% - 12.00% | 0.50% | Competitive rates overall |
| Bank of Baroda | 10.00% - 12.50% | 0.50% | Good for MSME veterans |
| Canara Bank | 10.00% - 13.00% | 0.50% | High disbursement track record |
| HDFC Bank | 11.00% - 14.00% | 0.50% - 1.00% | Fast digital processing |
| ICICI Bank | 11.50% - 15.00% | 0.50% - 1.00% | e-Mudra online application |
| NBFCs / MFIs | 12.00% - 16.00% | 1.00% - 2.00% | Easier approval, rural reach |
Key factors that affect your rate: your CIBIL/credit score, business vintage (how long you have been operating), loan category (Shishu gets the best rates), business revenue consistency, and whether you are an existing customer of that bank.
Women Entrepreneurs - Special Benefit
MUDRA extends a reduction of 25 basis points (0.25%) in its refinance rates to MFIs and NBFCs that lend to women entrepreneurs. Additionally, a 2% interest subvention is available on prompt repayment of Shishu loans for a period of 12 months.
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5. Documents Required
Documentation requirements vary by loan category. Shishu loans need minimal paperwork, while Kishore and Tarun require more detailed documentation. Here is the complete list:
| Document | Shishu | Kishore | Tarun / Tarun Plus |
|---|---|---|---|
| Aadhaar Card | Required | Required | Required |
| PAN Card | Required | Required | Required |
| Passport-size Photos | Required | Required | Required |
| Address Proof (Utility bill / Rent agreement) | Required | Required | Required |
| Business Registration / Udyam | If available | Required | Required |
| Business Plan / Project Report | Basic | Required | Detailed |
| Bank Statement (Last 6 months) | Not needed | Required | Required |
| ITR / Balance Sheet (Last 2 years) | Not needed | If available | Required |
| Quotation of machinery / equipment | Not needed | If buying assets | Required |
6. How to Apply for Mudra Loan (Online and Offline)
You can apply for a Mudra Loan through both online and offline channels. Here is a step-by-step breakdown of each method:
Method 1: Online Application
Visit the official portal
Go to udyamimitra.in or PSBLoansIn59Minutes.com or your bank's website
Register and create an account
Fill in your Aadhaar, PAN, and basic details to register
Select Mudra Loan and choose your category
Pick Shishu, Kishore, or Tarun based on your funding requirement
Fill the application form and upload documents
Complete all fields, attach scanned copies of required documents
Submit and track
After submission, the bank will verify and process. Track status online.
Method 2: Offline (Branch Visit)
Visit the nearest branch of any bank, RRB, Small Finance Bank, or NBFC that offers Mudra loans. Ask for the Mudra loan application form, fill it along with required documents, and submit. The bank officer will guide you on the category and process.
Pro Tip
Approach public sector banks first -- they have government mandates to disburse Mudra Loans and may be more flexible than private lenders. If you already have a savings or current account with a bank, apply there first for faster processing and potentially better rates.
7. What is a Mudra Card?
The Mudra Card is a RuPay debit card linked to your Mudra working capital loan account. It works like an overdraft facility -- you can withdraw funds as needed (up to your sanctioned limit) and only pay interest on the amount used, not the full sanctioned amount.
This makes it highly cost-efficient for businesses with fluctuating cash flow needs. You can use the Mudra Card at any ATM, micro-ATM, or Point of Sale (POS) machine across India. It also helps in creating a digital credit history for the borrower, which benefits future loan applications.
8. Eligible Business Activities
Mudra Loans cover a wide range of non-farm, income-generating activities. Here are the major sectors and examples:
Manufacturing
Food processing, textiles, garments, handicrafts, furniture, paper products, printing, chemical products
Trading
Kirana shops, retail stores, wholesale traders, fruit/vegetable vendors, mobile shops, general stores
Services
Salons, tailoring, repair shops, transport, restaurants, photocopying, dry cleaning, laundry, gyms
Agri-Allied
Dairy farming, poultry, fishery, beekeeping, agri-clinics, food/agro processing, farm produce trading
The funds can be used for purchasing machinery or equipment, buying raw materials or inventory, working capital for daily operations, or even purchasing commercial vehicles for goods transport.
9. Approval Timeline and Tips to Get Approved Faster
| Category | Typical Approval Time | Documentation Level |
|---|---|---|
| Shishu | 7-10 working days | Minimal |
| Kishore | 2-3 weeks | Moderate |
| Tarun | 3-4 weeks | Detailed |
| Tarun Plus | 3-4 weeks | Detailed + repayment track record |
Tips to improve your approval chances:
1. Start with a Shishu loan if you are a first-time borrower. Repay it on time, and getting a Kishore/Tarun loan becomes significantly easier.
2. Prepare a clear, one-page business plan -- even for Shishu loans. It signals seriousness to the bank.
3. Maintain a separate bank account for business transactions.
4. File GST returns and ITR regularly, even if your turnover is below the threshold.
5. Check your CIBIL score before applying. A score above 700 significantly improves your odds for Kishore and Tarun categories.
6. Apply at a bank where you already have an existing account -- relationship banking matters.
Reality Check - Common Rejection Reasons
Incomplete documents, poor or no credit history, applying for the wrong category, no clear business plan, using loan for personal expenses, or being on a bank defaulter list. Also, never pay any agent or middleman to get a Mudra Loan -- MUDRA officially states there are no agents or middlemen involved. If someone demands fees upfront, it is a scam.
10. Check Your Eligibility with Vistarkriya Smart Apply
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| If You Need... | Best Scheme | Max Amount |
|---|---|---|
| Quick working capital for micro business | Mudra (Shishu/Kishore) | Rs 5 lakh |
| Business expansion (established unit) | Mudra (Tarun/Tarun Plus) | Rs 20 lakh |
| Manufacturing/service unit with subsidy | PMEGP | Rs 50 lakh |
| Collateral-free loan guarantee for MSME | CGTMSE | Rs 5 crore |
| SC/ST or women entrepreneur startup | Stand-Up India | Rs 1 crore |
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11. Frequently Asked Questions (FAQ)
Q1. What is the maximum loan amount under Mudra Loan in 2026?
The maximum is Rs 20 lakh under the new Tarun Plus category (introduced in October 2024). This is available only to borrowers who have successfully repaid a previous Tarun loan. For first-time applicants, the maximum is Rs 10 lakh under the Tarun category.
Q2. Do I need collateral for a Mudra Loan?
No. Mudra Loans are 100% collateral-free. You do not need to pledge any property, fixed deposit, or provide a third-party guarantee. The government provides credit guarantee through the Credit Guarantee Fund for Micro Units (CGFMU).
Q3. What is the interest rate for Mudra Loan in 2026?
Interest rates are not fixed by the government and vary by bank. Typical rates in 2026 range from 8.85% to 16% p.a. Public sector banks like SBI and PNB generally offer the lowest rates (9.50%-12%). Private banks and NBFCs may charge higher rates but offer faster processing.
Q4. Can I use a Mudra Loan for farming?
Direct crop cultivation is not covered. However, agriculture-allied activities are eligible -- this includes food processing, dairy farming, poultry, fishery, beekeeping, agri-clinics, and farm produce trading. If your activity involves processing or value-addition of agricultural products, you can apply.
Q5. How long does Mudra Loan approval take?
Shishu loans (up to Rs 50,000) can be approved in 7-10 working days. Kishore loans typically take 2-3 weeks, and Tarun loans can take 3-4 weeks due to larger amounts and detailed scrutiny.
Q6. Is CIBIL score mandatory for Mudra Loan?
For Shishu loans (up to Rs 50,000), CIBIL score is generally not a hard requirement. For Kishore and Tarun loans, a score of 650+ is preferred, and 750+ can help you negotiate better interest rates. The key requirement is having no active defaults or NPA.
Q7. Can I apply for Mudra Loan online?
Yes. You can apply online through the Udyami Mitra portal (udyamimitra.in), PSB Loans In 59 Minutes portal, Jan Samarth portal, or directly through your bank's website. Many banks also offer e-Mudra loan facilities for Shishu category with instant or same-day processing.
Q8. Is there any subsidy on Mudra Loan?
There is no direct subsidy under PMMY. However, a 2% interest subvention is available on prompt repayment of Shishu loans for a period of 12 months. If you need a loan with capital subsidy, look at PMEGP instead, which offers 15-35% subsidy on project cost. Use Vistarkriya Smart Apply to compare both schemes instantly.
Conclusion
Mudra Loan remains one of the most accessible and impactful government schemes for micro and small entrepreneurs in India. With collateral-free loans up to Rs 20 lakh, the new Tarun Plus category, 2% interest subvention on Shishu loans, and 52+ crore loans disbursed in 10 years, PMMY has proven itself as a genuine enabler of grassroots entrepreneurship.
Whether you are starting a kirana shop, expanding a salon, buying equipment for food processing, or scaling a tailoring unit -- there is a Mudra category built for your stage. The key is to prepare your documents properly, maintain clean credit history, and apply through the right channel.
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Disclaimer:
This article is for informational purposes only. Interest rates, eligibility criteria, and scheme details are subject to change as per RBI and government notifications. Always verify the latest details with your bank or the official MUDRA website (mudra.org.in) before applying. Vistarkriya does not charge any fees for loan processing or approvals -- our charges are solely for platform access and CRM tools.
Sources & References:
1. Official MUDRA Website
2. PIB Press Release - 10 Years of PMMY (April 2025)
3. IBEF - Pradhan Mantri Mudra Yojana
