Mudra loan is a scheme launched by the Government of India to provide loans up to 10 lakh to non-corporate, non-farm small/micro-enterprises. The scheme was launched on April 8, 2015, by the Honorable Prime Minister Narendra Modi. The scheme is designed to promote and ensure access to financial facilities to Non-Corporate Small Business Sectors (NCSBS) that will turn them into instruments of GDP growth and employment generation. The loans are easily accessible in three categories- Shishu, Kishore, and Tarun to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur and also provide a reference point for the next phase of graduation/growth.

Mudra loan is provided by banks, Microfinance Institutions (MFIs), and Non-Banking Financial Companies (NBFCs) . The loan is collateral-free, and the interest rate is low. Mudra provides refinance support to banks/MFIs for lending to micro-units having loan requirements up to Rs 10 lakh. The scheme is open to all Indian citizens who have a business plan for a non-farm sector income-generating activity such as manufacturing, processing, trading, or service sector and whose credit need is less than Rs. 10 lakh.

In summary, Mudra loan is a scheme launched by the Government of India to provide loans up to 10 lakh to non-corporate, non-farm small/micro-enterprises. The scheme is designed to promote and ensure access to financial facilities to Non-Corporate Small Business Sectors (NCSBS) that will turn them into instruments of GDP growth and employment generation. The loan is collateral-free, and the interest rate is low. Mudra provides refinance support to banks/MFIs for lending to micro-units having loan requirements up to Rs 10 lakh. The scheme is open to all Indian citizens who have a business plan for a non-farm sector income-generating activity such as manufacturing, processing, trading, or service sector and whose credit need is less than Rs. 10 lakh.