State Bank of India (SBI) has implemented different government schemes to offer financial assistance to deserving borrowers. MSME loan division has several schemes aimed towards budding and well-established business aspirants. PMMY (Pradhan Mantri Mudra Yojana) is one such initiative operated and managed by the SBI.
PMMY is a scheme started by our Prime Minister on 8th April 2015 to offer credit facilities to the non-farm MSME and corporate units with loans of as high as Rs 10 lakh. PMMY is a security-free credit option that can be utilized by you if you require funds for your organizational requirements, business expansion purpose, set up of your company, etc. This specific credit can be used for setting up new business units or to expand the existing enterprise.
The full form of MUDRA is Micro Units Development & Refinance Agency Ltd. This is a financial institution set up by the Indian Government for the refinancing and development of micro-unit businesses. MUDRA has enrolled about 27 public sector banks, 27 regional rural banks, 17 private sector banks and 25 microfinance institutions as partners to channel the support to those borrowers who are deservingly depending on the eligibility parameter.
SBI provides several SME loans involving the PMMY (Pradhan Mantri Mudra Yojana)
Here’s a snapshot of the SBI e Mudra loan by the State Bank of India
|Nature of the credit||Offered as working capital or term loan|
|Loan repayment period||3 – 5 years|
|Margin||Nil for a loan of as high as Rs 50,000
10 per cent for the loan proceeds between Rs 50,001 and Rs 10 lakh
|Processing charges||Nil for Kishore and Shishu loans
0.5 per cent of loan proceeds for Tarun loans
|Rate of interest||Linked to the MCLR rates|
|Security or collateral||Zero collateral is needed.|
|Credit nature||Provided as working capital or term loan|
|Loan quantum||Entrepreneurs looking to begin a new business or grow their established profit-generating entities to expand their business|
|Loan quantum||Highest loan proceeds – Rs 10 lakh
Shishu category – Loan of as high as Rs 50,000
Kishore category – Loans between Rs 50,001 and Rs 5 lakh
Tarun category – Loans between Rs 5,00,001 and Rs 10 lakh
|Purpose||Capital for the startups, expansion of units, modernization of the existing units, and purchase of the machinery and equipment.|
Major features of SBI e Mudra loan by the State Bank of India
SBI e mudra loan is of 3 categories. You can apply in an appropriate category depending on your requirements.
Shishu – Loans of as high as Rs 50,000 with the interest rate being a minimum of 1 per cent every month or 12 per cent per annum. The loan repayment period ranges anywhere between 1 and 5 years.
Kishore – Loans between Rs 50,001 and Rs 5 lakh. The rate of interest would be based on the lender, keeping your credit repayment potential and history in mind in compliance with scheme guidelines. The loan repayment duration is based on the bank’s discretion but is not extended to 5 years.
Tarun – Loans between Rs 5 lakh and Rs 10 lakh. The rate of interest would be based on the lender, keeping your credit history and profile in mind in compliance with the guidelines of the scheme. Repayment duration is based on the discretion of the bank but not extended the period of 5 years.
A loan that you can get as per the Mudra scheme is covered by CGFMU (Credit Guarantee for Micro Units) and offered by the NCGTC (National Credit Guarantee Trustee Company) and hence doesn’t require any security or collateral. Maximum loan tenure for loan is five years involving a moratorium of as high as 6 months based on the income generation capacity and activity of the unit. The annual review may be conducted.
Major 3 takeaways –
The holders of cash credit are issued a Mudra Rupay card for instantaneous access to quick funds.
Funding needs are dependent on the development and growth stage of micro units and entrepreneurs’ merit.
The competitive rate of interest in the market is determined depending on your credit profile.
SBI e mudra loan eligibility parameter
SBI mudra loans can be taken up by entrepreneurs who are looking to set up a new business or uplift their established profit-generating business. The loan can be taken up step by step following the people engaged in the NCSB (non-corporate small business segment) from both the urban and rural regions. This specific segment consists of several partnership firms or proprietorship companies running as service sector units, small manufacturing units, truck operators, shopkeepers, fruit and vegetable vendors, repair shops, food service units, artisans, machine operators, food processors, etc.
Start-up applicants must show a viable business model that depicts the profit-making potential of their business to get this loan. Startups are generally categorized as Shishu schemes to get loan proceeds of as high as Rs 50,000. Well-established business units already generating profits can apply under Tarun and Kishor categories for credit to expand their business or upgrade their equipment and machinery. Such applicants must submit a profit proof and even substantiate the requirement for equipment upgradation and machinery. They must explain how such upgradation and expansion can assist in improving their business and profits and even generate more employment opportunities.
How to place an application for an SBI e Mudra loan?
Existing SBI customers who maintain a savings bank or a current account can apply for the e-mudra loan of a loan proceed of as high as Rs 50,000 through the online medium or by clicking on the SBI e-mudra loan site. Applicant must be between 18 and 60 years. The deposit account must be active for a minimum of six months. Others can visit the nearest SBI branch to place the SBI e mudra loan application.
Crucial documents required for the SBI e mudra loan application –
Identity proof – driving license, voter ID card, Aadhaar card, PAN card, photo ID issued by the government authority or passport.
Residence proof – Current electricity and telephone bill, property tax receipts, Aadhaar card, voter’s ID card, passport and certificates issued by the government authority, etc.
Bank statements – Past six months’ bank statements from their current bank, if any.
Quotation for the proposed buy of machinery or equipment – The application must be accompanied by a quotation for machinery and other items that have been purchased for the business.
Photo – Two current passport-size photos.
Caste certificate – In the case of scheduled caste, other backward categories, scheduled tribe, or minority sector, if applicable.
Business proof – Copies of registration certificates, licenses, rent or lease agreements or other important documents to establish the identity, ownership, and address of business units.