What is the Purpose of Mudra Loan?

Mudra loan is one of the best financial support extended to small businesses which can be used in a variety of ways that lead to income generation and job creation. They provide business loans to vendors, traders, shopkeepers and other service sector activities. It helps provide working capital loans, equipment finance, vehicle loans (for commercial use), etc.

Mudra card

A mudra card is a debit- ATM card issued against the MUDRA loan account for the working capital loan. This Mudra card helps the borrower to make multiple withdrawals and credits, to manage the working capital limit efficiently and to minimize the burden of interest. It also aids in the digitization of MUDRA transactions and the creation of a credit history for the borrower. The card can be used throughout the country for making transactions from any ATM and can also make payments through any Point of Sale machine.

Businesses activities that are covered under Mudra loans

Transport activities

Usually, a MUDRA loan can be used to buy transport vehicles like autorickshaws, 3 wheelers, 2 wheelers, e-autos, taxis, tractors, trolleys, etc. These vehicles are used strictly for commercial purposes only.

Community, Social & Personal Service Activities

Mudra loans can be obtained by businesses or services that involve community activities, social and personal services. Examples of these activities include salons,beauty parlours, gymnasiums, dry cleaning, tailoring, DTP, medical shops, courier agencies, etc.

Food Sector

For those businesses that are related to the food sector like papad making, achaar, jam/jelly making, bakers, sweet shops, food stalls, catering services, cold chain vehicles, cold storage, ice making units, ice cream shops, etc.

Textile products or Activity

Mudra loan mainly applied by businesses that are related to textile enterprises which include handloom, power loom, khadi activity, zari work, traditional embroidery, handwork etc. it also helps provide financial support to businesses, that involve traditional dyeing, painting, apparel design, knitting, cotton ginning, etc.

Activities allied to agriculture.

Though mudra loan is not eligible for those working in the agricultural sector, it can be availed by people doing business in agriculture related activities like pisciculture, apiculture, poultry, livestock rearing, agro-industries, diary, fisheries, food processing, etc.