Pradhan Mantri Mudra Yojana Refinance Eligibility Criteria For mudra Loan Guidelines. The establishment of the MUDRA Bank, as suggested by Union Finance Minister Arun Jaitley, marked a significant stride towards “funding the unfunded.” This initiative was initially outlined in his budget speech in February. In this article, we present a comprehensive overview of the eligibility criteria for the Pradhan Mantri Mudra Yojana Scheme. Please find all the pertinent details below.
- 1 PMMY: Eligibility Criteria For Mudra Loan
- 2 Microfinance Institutions
- 3 FAQ?: Pradhan Mantri Mudra Yojana
PMMY: Eligibility Criteria For Mudra Loan
The Micro Units Development and Refinance Agency (MUDRA) has incorporated eligibility standards applicable to different categories of banks that function as partner lending institutions. This enables them to access refinance facilities for micro-enterprises operating in both rural and urban areas within the manufacturing, trading, and service sectors.
|Article Name||Eligibility Criteria For Mudra Loan|
|Official Website||Click Here|
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A. Public Sector Banks
- Must demonstrate a profit in the last two years, or possess a minimum external long-term instrument rating of not less than A-(minus) from accredited credit rating agencies in case of profit shortfall.
- Maintain a Net Non-Performing Assets (NPAs) level below 15%.
- Comply with the Capital to Risk-Weighted Assets Ratio (CRAR) requirements as per RBI regulations at the time.
- Maintain a minimum net worth of over Rs. 250 crore.
B. Banks in the Private Sector
- Demonstrated profitability in the past two years; if not, a minimum external rating of long-term instruments should not fall below A-(minus) from accredited credit rating agencies.
- Maintain a Net Non-Performing Assets (NPAs) level not exceeding 3%.
- Adhere to the Capital to Risk-Weighted Assets Ratio (CRAR) requirements specified by RBI as per prevailing regulations.
- Possess a net worth exceeding Rs. 250 crore.
C. Banks in Rural Regions
- Profitability in the last two years must be evident; otherwise, a minimum external rating of long-term instruments should not dip below A-(minus) from recognized credit rating agencies.
- Ensure that the Net Non-Performing Assets (NPAs) do not surpass 3%.
- Comply with the Capital to Risk-Weighted Assets Ratio (CRAR) criteria outlined by the RBI, following the current regulations.
- Maintain a net worth exceeding Rs. 250 crore.
Urban Cooperative Banks
- In operation for a minimum of 3 years.
- Demonstrated a net profit in at least three out of the preceding four years, with no net loss incurred in the immediate preceding year.
- Maintained a substantial outstanding portfolio pertaining to micro/small business entities engaged in manufacturing, trading, and services.
- Boasts robust fundamentals, including a net worth of at least Rs. 50 crore, Capital to Risk Weighted Assets (CRAR) compliance as per RBI regulations for Financially Sound and Well Managed (FSWM) UCBs, NPAs not exceeding 3%, and an absence of accumulated losses in their financial records.
- Holds the status of a Scheduled Bank.
- Achieved an ‘A’ audit classification as per the last audited statement of the bank.
Banks in the State Co-operative Sector
- Net NPA limited to 10% as per the latest audited statement.
- Demonstrated a net profit over the last 2 years.
- Absence of accumulated losses in their financial records.
- Holds an ‘A’ audit classification according to the most recent audited statement of the bank.
- State Co-operative Banks meeting the minimum CRAR requirements specified by RBI as per current regulations.
- Individual District Central Co-operative Banks (DCCBs) affiliated with State Co-operative Banks and meeting the aforementioned CRAR requirements are eligible to access refinance through the State Co-operative Banks, staying within the overall exposure limit of the State Co-operative Banks.
- Must be a registered legal entity engaged in lending to micro units that meet the MUDRA’s loan size criteria (currently set at Rs. 1 lakh or as per RBI guidelines) for a minimum of 3 years, or the promoters/management should possess at least 10 years of relevant experience.
- Should have an existing outreach to a minimum of 3000 borrowers.
- Should have received a minimum capacity assessment rating, such as Mfr-4 (equivalent to CRISIL) for Tamil Nadu, Kerala, Karnataka, and Puducherry, or Mfr-4 for Tier-I and Tier-II MFIs, and Mfr-5 for Tier-III MFIs in other states.
- Must demonstrate appropriate systems, processes, and procedures including internal accounting, risk management, internal audit, MIS, cash management, etc.
- Should primarily target enterprises within the micro units category owned and operated by the proprietor.
- Must comply with the minimum CRAR and other norms specified by RBI for MFIs registered as NBFC-MFIs, as well as adhere to all prevailing RBI guidelines, including pricing regulations.
- Should have a profitable track record over the past three years, with a recovery performance of not less than 90% and a Portfolio at Risk > 90 days below 5% (with a relaxation up to 7% on a case-by-case basis) for MFIs.
- Must be a member of credit bureaus as per RBI’s policy.
- Should have a minimum term loan/refinance requirement of Rs. 0.50 crore.
- Should target the underprivileged, especially women, and adhere to a secular approach.
- Must possess audited financial statements. In the case of NGOs with microfinance as a program, the NGO should have separate audited financial statements for the MFI program.
- For NBFCs or any other MFI established by taking over the existing MF operations of another entity, the track record of the earlier entity can be considered for existence, past ratings, etc., subject to the continuity of promoters/senior management/transfer of a major (> 60%) part of the MF operations of the earlier entity.
- Loans provided by MUDRA should be on-lent by MFIs to be used by borrowers for setting up/running nonfarm income-generating activities and micro/small enterprises, including trading activities and services.
Non-Banking Financial Companies (NBFCs)
A. NBFCs with a substantial asset size exceeding Rs. 500 crore.
- The NBFC should be registered with RBI as Asset Finance Company (AFC) or Loan Company. In respect of NBFC-Loan Company, a CA certificate that if the loan is given for income generating activities, 60% of the income comes from productive assets should be furnished.
- NBFC should have been in business for 5 years and should have earned Net Profit for last 3 years. In case of the NBFCs financing second hand vehicles, the NBFC needs to have experience of 3 years in the activity and also have recorded profit during the period.
- Minimum Net Owned Fund of Rs.20 crore and Minimum Asset size of Rs.50 crore
- CRAR-Minimum 15%.
- Recovery rate of not less than 90% and Net NPA not exceeding 3%.
- External rating range of BBB+ and above.
B. NBFCs with a more modest asset size, specifically those with assets totaling less than Rs. 500 crore.
- The NBFC must hold registration with RBI as an Asset Finance Company (AFC) or Loan Company. In the case of NBFC-Loan Companies, they are required to furnish a CA certificate confirming that if loans are provided for income-generating activities, a minimum of 60% of the income should originate from productive assets.
- The NBFC should have a business history of 5 years (with a relaxation option of up to 3 years) and must have consistently earned a net profit in the last 3 years. For NBFCs engaged in financing second-hand vehicles, they should have at least 3 years of experience in the activity and a record of profitability during that period. Preference may be granted to NBFCs with well-established credit facilities from Scheduled Commercial Banks.
- Maintain a minimum Net Owned Fund of Rs. 15 crore and an Asset size of at least Rs. 25 crore.
- The NBFC should have conducted lending operations of at least Rs. 20 crore during the immediately preceding financial year.
- Maintain a Capital to Risk-Weighted Assets Ratio (CRAR) of a minimum of 15%.
- Maintain a recovery rate of not less than 90% and ensure that Net Non-Performing Assets (NPA) do not exceed 3%.
- Possess an external rating ranging from BB- and above. The external rating should not be more than 6 months old.
Eligibility Criteria For Mudra Loan
- Eligible enterprises encompass all “Non-farm enterprises.”
- These enterprises fall within the “Micro Enterprises” and “Small Enterprises” segments.
- They are actively involved in “income-generating activities.”
- Their operations span across “manufacturing, trading, and services.”
- The credit requirements of these enterprises do not exceed Rs. 10.00 lacs.
- Eligible for various types of Fund-Based or Non-Fund-Based facilities.
- No minimum amount requirement.
- The maximum allowable amount is up to Rs. 10.00 lacs.
Segmentation For Pradhan Mantri Mudra Yojana Loan:
|Category||Stipulated Credit Limits|
|SHISHU||Loans sanctioned up to Rs. 50,000|
|KISHORE||Loans sanctioned from Rs. 50,001 to Rs. 5.00 lacs|
|TARUN||Loans sanctioned from Rs. 5,00,001 to Rs. 10.00 lacs|
|Limits||Micro Enterprises||Small Enterprises|
|Up to Rs. 50,000/-||Base Rate||Base Rate + 0.50%|
|Above Rs. 50,000/- to Rs. 2.00 lacs||Base Rate + 0.50%||Base Rate + 1.00%|
|Above Rs. 2.00 lacs to Rs. 10.00 lacs||Base Rate + 1.00%||Base Rate + 1.25%|
Processing Charges: Eligibility Criteria For Mudra Loan
Micro Units Development & Refinance Agency Limited (MUDRA Ltd)
MSME Development Centre, C-11, G-Block, Bandra Kurla Complex,
Bandra East, Mumbai – 400 051.
Email: [email protected]
FAQ?: Pradhan Mantri Mudra Yojana
The loans under Mudra Scheme are guaranteed by Credit Guarantee for Micro Units (CGFMU) and the same is provided through National Credit Guarantee Trustee Company (NCGTC). The guarantee cover is available for five years and hence for advances granted under Mudra Scheme the maximum period is 60 months.
Can I take a MUDRA loan from two banks? Once you apply a MUDRA loan, this will be updated in your credit report. And if you apply for another MUDRA loan under another lender, they would know that you had already applied for a MUDRA loan elsewhere. So that lender will most likely not approve your MUDRA loan application.02-May-2020
The applicant should be of 18 years of age at the least or 65 at the most to avail a Mudra loan. Mudra loans can be availed by non-farm-related income-generating businesses in trading, services, and manufacturing. Additionally, the credit requirement must be that of ₹10 Lakh or lower.