PM Mudra Loan 2026: Eligibility, Loan Limits, Interest Rates and How to Apply

The Pradhan Mantri MUDRA Yojana (PMMY) helps eligible micro and small business owners access formal credit for income-generating business activities. Under the scheme, eligible borrowers may apply through participating banks and other lending institutions for loans ranging from small working-capital needs to ₹20 lakh under Tarun Plus, subject to its specific eligibility condition and the lender’s assessment.

Quick answer: PMMY is a business-credit scheme, not a savings account or a bank branch called “Mudra Bank”. MUDRA supports the micro-enterprise lending ecosystem; eligible loans are sanctioned and disbursed by participating lending institutions. The interest rate, repayment period, documents and approval decision depend on the lender and the applicant’s case.

Important: MudraBank.com is an independent information website. It is not the official website of the Government of India, MUDRA, SIDBI or any bank. We do not sanction loans, guarantee approval, collect government loan applications or promise subsidies. Always verify scheme details and apply through official government or lender channels.

What is MUDRA Bank and what is the PM Mudra Loan scheme?

MUDRA stands for Micro Units Development and Refinance Agency Ltd. The Pradhan Mantri MUDRA Yojana was launched on 8 April 2015 to improve access to institutional credit for micro enterprises. The scheme covers eligible income-generating activities in manufacturing, trading and services, as well as certain activities allied to agriculture, such as dairy, poultry and beekeeping. Both term-loan and working-capital needs may be considered.

People often search for “Mudra Bank” because that phrase is commonly used for the scheme. However, applicants generally do not open an account at a retail branch called Mudra Bank. They approach a participating bank, small finance bank, regional rural bank, NBFC or microfinance institution that offers PMMY loans. MUDRA and the participating lender have different roles; the lender assesses the application and communicates its terms.

Official scheme information: Department of Financial Services, Government of India — PMMY and MUDRA official website.

PM Mudra Loan limits: Shishu, Kishor, Tarun and Tarun Plus

PMMY has four loan categories. Choose the category based on the amount required and your eligibility—not simply the age of your business. The categories describe loan amounts; they do not mean that every applicant will automatically qualify for the maximum limit.

Category	Loan amount	What it may support
Shishu	Up to ₹50,000	Small initial business expenses, tools, stock or working capital.
Kishor	Above ₹50,000 and up to ₹5 lakh	Business needs such as equipment, inventory or expansion.
Tarun	Above ₹5 lakh and up to ₹10 lakh	Higher funding needs for an eligible micro-enterprise.
Tarun Plus	Above ₹10 lakh and up to ₹20 lakh	Eligible entrepreneurs who have previously taken and successfully repaid a Tarun-category loan, subject to lender appraisal.

Tarun Plus condition: The category applies to entrepreneurs who have availed and successfully repaid a previous loan under the Tarun category. It became effective from 24 October 2024. A first-time applicant should not assume that the ₹20 lakh limit is available without meeting this condition.

PM Mudra Loan information and loan categories — Check the current scheme category and loan terms with the lending institution before applying.

What is the Mudra loan interest rate in 2026?

There is no single universal PMMY interest rate that applies to every borrower and every bank. The actual rate and other charges are set by the lending institution under its applicable policies and regulatory requirements. They may depend on the product, loan amount, repayment period, risk assessment and the borrower’s profile.

For an accurate quotation, ask the lender for the annual interest rate, whether it is fixed or floating, the reducing-balance method if applicable, processing or documentation charges, insurance or other optional costs, repayment schedule, moratorium (if any), late-payment charges and the total amount payable. Compare written offers rather than relying on a website’s general rate range.

Do not assume that a Mudra loan is automatically interest-free, that a particular bank always has the lowest rate, or that a processing fee is the same at every lender. Confirm the current terms directly with the bank or financial institution before accepting an offer.

Who can apply for a PM Mudra Loan?

PMMY is intended for eligible micro-enterprises and small business activities that generate income. Depending on the lender’s product and assessment, applicants may include individuals, proprietors, partnership firms and other eligible business entities operating in activities such as:

Retail shops, small traders and local service providers.
Manufacturing and small production units.
Repair shops, workshops, artisans and service businesses.
Food businesses, restaurants, bakeries and other eligible commercial services.
Eligible transport and commercial vehicle activities.
Allied agricultural activities such as dairy, poultry and beekeeping, where permitted under scheme and lender rules.

Eligibility is not automatic simply because a person is an Indian citizen or runs a small business. The lender may assess the activity, repayment capacity, business plan, banking history, existing liabilities, credit history and applicable KYC requirements. Age criteria, entity documents and other conditions can vary by lender and product. Check the current requirements with the institution accepting your application.

Documents commonly requested for a Mudra loan

The exact checklist varies by lender, loan category and applicant type. Ask the chosen lender for its current application form and document list. Depending on the case, documents may include:

Completed application form and recent photographs, where required.
Identity and address proof, such as documents accepted under the lender’s KYC process.
PAN and other tax or entity documents, where applicable.
Business address proof, registration, licence or Udyam details, if applicable to the business and lender.
Bank statements and information about existing loans or liabilities.
Quotation for machinery, equipment or other proposed purchases, if relevant.
A business plan or project report showing the purpose of funds, expected sales, expenses and repayment capacity.
Financial statements, tax returns or sales records, where requested.

This is a general preparation list, not a claim that every item is mandatory for every PMMY application. Do not send Aadhaar, PAN, bank statements or other sensitive documents to an unverified agent or email address. Use the lender’s official channel and retain an acknowledgement of your application.

How to apply for a PM Mudra loan online or at a bank

You can begin by checking the official government scheme information and then following the application route offered by a participating lender. Online availability and the steps offered differ by bank and loan product.

Estimate your funding requirement. Prepare a realistic amount based on stock, equipment, working capital or another eligible business purpose.
Prepare your business information. Note the business activity, location, expected revenue, costs, existing liabilities and how the loan will be repaid.
Check official information. Read the Department of Financial Services PMMY page. You may also check the JanSamarth portal for available government-linked credit journeys.
Choose a participating lender. Confirm that the institution currently offers the relevant PMMY category and ask for its application channel and document checklist.
Submit the application and documents. Use the lender’s official website, branch or authorised channel. Save your application or reference number.
Review the offer carefully. Before signing, check the sanctioned amount, interest rate, fees, instalments, repayment period, security terms and all conditions.
Track the application with the lender. Processing times vary. Online eligibility checks or an in-principle indication are not the same as final sanction or disbursal.

Is collateral required for a PM Mudra loan?

PMMY is described by the Government of India as providing institutional collateral-free credit to eligible micro-enterprises. However, applicants should read the lender’s sanction terms and ask what primary security, hypothecation of assets, guarantees, documentation or other obligations apply to their particular facility. “Collateral-free” does not mean that repayment is optional or that a loan will be approved without appraisal.

Does a PM Mudra loan include a subsidy?

Do not assume that PMMY itself provides an automatic subsidy or interest-free finance. A separate scheme may have its own eligibility, subsidy or convergence provisions, but that must be verified with the responsible government department or lender. Never pay an intermediary who promises guaranteed approval, a guaranteed subsidy or a special rate in exchange for an unofficial fee.

What to do if your PM Mudra Bank loan application is delayed or declined

First, request the application status and any missing-document requirements from the lender, using your application reference number. If the application is declined, ask for the reason and whether any information can be corrected or supplemented. Keep copies of submitted documents, communications and acknowledgements.

If your complaint concerns the lender’s service, use that institution’s official grievance-redressal process. If it remains unresolved, check the applicable escalation route on the Reserve Bank of India website and confirm whether the institution and complaint type fall within the relevant mechanism. MudraBank.com is an independent information site and cannot compel a lender to sanction or disburse a loan.

Frequently asked questions about Mudra Bank and PMMY

1. Is Mudra Bank a government bank?

MUDRA is the Micro Units Development and Refinance Agency. “Mudra Bank” is a common search phrase, but applicants do not generally open a retail account at a branch called Mudra Bank. PMMY loans are processed by participating lending institutions. MudraBank.com is independent and is not a government website.

2. What is the maximum amount under the PM Mudra Loan scheme?

The maximum category limit is ₹20 lakh under Tarun Plus. This category is for entrepreneurs who have previously availed and successfully repaid a Tarun-category loan. All applications remain subject to the lender’s assessment and terms.

3. Can a first-time borrower apply for a ₹20 lakh PM Mudra loan?

Tarun Plus has a specific prior-Tarun-loan repayment condition. A first-time borrower should not assume they qualify for Tarun Plus. Ask a participating lender which PMMY category, if any, fits your circumstances.

4. What is the interest rate on a Mudra loan?

There is no single rate applicable to all PMMY loans. The lender determines the applicable rate and charges under its policies and regulatory requirements. Request a written quotation and compare the total repayment cost.

5. Is a Mudra loan available online?

Some lenders provide online application journeys for eligible applicants and products; others may require branch-based steps or additional verification. Start from the lender’s official website or the government’s JanSamarth portal, and verify the domain before sharing documents.

6. Which documents are required for a Mudra loan?

Requirements depend on the lender and application. Commonly requested items may include identity and address proof, PAN where applicable, business details, bank statements, registration documents where relevant and a project report or quotations. Obtain the lender’s current checklist before applying.

7. Is a PM Mudra loan guaranteed to be approved?

No. The scheme does not mean every application will be sanctioned. The participating lender assesses eligibility, business viability, repayment capacity, documents and its applicable credit requirements.

8. Is a subsidy or interest-free loan available under PMMY?

Do not assume that PMMY automatically provides a subsidy or zero-interest loan. Confirm any separate subsidy programme and its conditions with the responsible authority and lender. Read all loan charges before accepting an offer.

9. Can I use a PM Mudra loan for education or personal expenses?

PMMY is designed for eligible income-generating micro-business activities, not general personal borrowing. Ask the lender whether your specific proposed use qualifies under the current scheme rules.

10. How long does PM Mudra loan approval take?

There is no single approval time that applies to every lender and application. Timing depends on document completeness, verification, business assessment and the lender’s process. Ask for an expected timeline and track the application using its reference number.

Official sources and further reading

Editorial note: Scheme information can change. This guide is for general information and is not financial, legal or lending advice. Verify the current scheme terms with official sources and the participating lender before making a financial decision. Last reviewed: 23 October 2026.

Content Overview