The Government of India has introduced the Mudra loan intending to promote affordable business and entrepreneurship loans. The full form of Mudra is Micro Units Development and Refinance Agency Loans which are provided to small enterprises and non-farm agencies, trading, and manufacturing.
The interest rates of MUDRA loans may vary from bank to bank. Subject to requirements MUDRA categorizes these loans into three segments, Shishu, Kishor, and Tarun. Therefore the interest rates also change depending on each segment, based on their needs and prescribed guidelines.
What are the Interest rates under MUDRA?
The MUDRA loan interest rate for these categories varies depending on the amount borrowed and how it will be used. Below in detail shows the interest:
Shishu Loan:
Under Mudra, Shishu loan provides small entrepreneurs up to Rs. 50,000 for a repayment period of five years, to establish their business. The interest rate for this loan will be from 1 per cent per annum to 12 per cent per annum.
Kishor Loans:
This loan will be useful for one who already kicks start their business but needs capital for running the business’s day-to-day activities. Also for new ventures where the Shishu loans are not sufficient, they can opt for Kishor loans. Kishor loans will allow the applicant to borrow between Rs. 50,000 and 5 Lakhs. The interest rate for Kishor loans ranges between 8.05 per cent to 11.05 per cent. Sometimes the interest rate will go higher based on the existing guidelines or credit rating of the borrower.
Tarun Loan:
Growth to the next phase of an existing business requires funding at the correct time, entrepreneurs can apply for a Tarun loan for the expansion. Applicants can get a loan amount between Rs. 5 Lakh to Rs. 10 Lakh. The loan tenor will be decided by the bank as per their policies. The interest rate for the Tarun loan ranges between 11.5 per cent to 20 per cent.
How to get a Mudra Loan at a low-interest rate?
Follow the below-mentioned suggestions to get a Mudra loan with low interest rates:
- Research about banks offering Mudra loans.
- Compare banks offering Mudra loans and their interest rates.
- Applicant’s banking history and repayment capability play a factor in reducing the interest rates
- The higher the annual turnover, the lower the interest rate
- Applicants with no previous loan defaults will have an advantage
- The nature of business will define the interest rates
Below are the interest rates provided by a few banks:
| Lenders | Interest Rate |
|---|---|
| SBI | 9.75% onwards |
| Bank of Baroda | 8.15% onwards |
| Oriental Bank of Commerce | 9.65% onwards + SP (Strategic Premium) |
| Corporation Bank | 9.90% onwards |
| Bank of Maharashtra | 8.15% + BSS onwards |
| Andhra Bank | 8.20% onwards |
| Punjab National Bank | 9.60% onwards |
These interest rates also will vary at the discretion of the banks and RBI. Also, GST and other fees will be extra imposed on the amount. Click here to learn more about, how to apply for a Mudra loan?
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