How to Benefit from the Modi Government's Mudra Scheme?

Read carefully, then ask whatever comes to mind. First of all, let me address those who frequently ask, "I do such and such work, or I wish to do it. Will I get a Pradhan Mantri MUDRA loan for this or not?" I would like to share the diverse domains of individuals who have benefited under the MUDRA Scheme from my branch so far:

Grocery kiosk,
Large grocery store,
Small tailor shop,
Rubber slipper and footwear shop,
Cement, coarse sand, gravel, and TMT bar shop,
Readymade garment retailer,
Electronic items shop,
Utensil shop,
Puncture repair and air-filling shop,
Large bicycle dealership,
Retail ventures run by women from home,
Mobile and computer shop,
Sweet shop,
Ice cream factory,
Automobile sub-dealer,
Photo studio,
RO-water plant (under construction)

It is clear from these living examples that virtually any line of work can fall under the MUDRA Scheme. Under the MUDRA Scheme, the maximum possible amount for a loan/CC limit is 10 lakh. This settles what kind of work falls under 'MUDRA'.

Which documents are required for a loan under the MUDRA Scheme?

Basic requisites needed by almost everyone: Aadhaar card, PAN card, a valid mobile number, and 3-4 photographs.

For small-scale operators such as fruit vendors on handcarts, small kiosk owners, cobblers, barbers, etc., Aadhaar, photographs, and a mobile number are sufficient.

For businessmen, large shop owners, and those seeking loan amounts of a higher magnitude: Aadhaar, PAN, photographs, mobile number, balance sheets for the past 3 years (if the firm is old), stock statement, current and next 2 years' estimated and projected balance sheets (unaudited ones will suffice), IT returns for the past 3 years, GST documents, etc. If you need a loan of 4-5 lakh or more, it is advisable to prepare an informal project report yourself. Although not strictly mandatory, it helps keep things clear for you and facilitates explaining it clearly to the bank manager.

What will a Project Report contain?

Name of the firm,
Name of the proprietor,
Address,
Date of establishment,
Dealing with...,
Current status, profit and loss,

(If you are opening a new firm or shop, ignore the above items and continue from here.)

Why is the loan required?
How much loan is required?
What goods/equipment are to be purchased?
What are the prospects of good sales for those goods in that area?
Your experience in this domain?
Capital available with you?
How many people will work under you?
At what rate will you sell the goods?
What will be their salary, the electricity bill, and the shop rent?
Calculate the total monthly expenses, calculate the total estimated monthly income, and find the difference between the two. Out of this surplus, you have to pay the bank installment and also retain capital to run the business.

Now, the procedure or process to secure the loan...

Assemble all the aforementioned documents and visit the bank. Meet the manager or the loan officer. Provide full details in accordance with your project report. Ask them if any further information is needed. Hand over a complete photocopy set of every document to the manager. Then inquire when you should meet them again. They will call you at their convenience.

If everything is in order and the manager is satisfied, your loan can be sanctioned even within a single day.

In this event, you will need to obtain a "quotation" from an authorized dealer for the goods or equipment to be purchased. The GST number must be explicitly stated on it.

You will need to deposit 10% of the total amount stated in the quotation, or of the approved loan amount, into your account as margin money. The bank will provide a loan for the remaining 90%. Your interest will accrue only on that 90% amount.

For loans up to 50,000, processing charges are nil, that is, zero. For loans up to 1,50,000, it costs approximately 1,400 to 1,500 rupees—to give a broad estimate. This sum must be available in your account at the commencement of the loan.

Once the loan is disbursed, the money reaches the dealer/vendor via Demand Draft (DD) or NEFT/RTGS, and you collect the goods from them. Along with the goods, you must bring the invoice for those very items as specified in the quotation—exactly identical.

The loan process is complete; now execute your work diligently and continue depositing the fixed monthly installments in the bank on time starting next month.

A few pieces of advice,

Do not attempt to intimidate or pressure the bank manager using contacts or influence for a MUDRA loan. Otherwise, it creates the impression that if you resort to such tactics prior to receiving the loan, you will create significant trouble when it comes to repayment.

Exercise patience. It is possible that the manager is continuously occupied with other pressing duties, which might be delaying your work. Allow them some time.

Purchase precisely the goods and at the exact value specified in the quotation. If any discrepancy is found in either the items or the value, a case of fraud against the bank can be initiated against both you and the supplier of the goods.

If anything remains unaddressed, please ask in the comments. I shall respond to the extent possible.

 - Shri Rahul Singh, author, expert on government schemes, and writer on subjects of national importance

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