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E-Mudra Loan: Details, Eligibility and Procedure

Created on 09 Jan 2023

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Updated on 09 May 2024

E-Mudra Loan: Details, Eligibility and Procedure

The MSME sector has a great contribution to the growth of the Indian economy. As per the Business Standard report, the MSME sector contributed 30% to the Indian GDP. However, one of the key problems that the sector faces is the lack of capital and funding access. To increase credit access for MSMEs and small businesses, the E-Mudra scheme was launched by the government. Let us learn What Is E Mudra Loan and how useful it is in providing credit access to the MSME sector?

Remember the Google ad with the #BolneSeSabHoga where the cleaning lady wanted to open an eatery? She asked many questions to Google Assistant about finance and somehow managed to achieve her goal. One of the questions was, "Bank se loan lene ke liye kya karna hoga?" An answer that Google could have returned was about the PMMY. The E-Mudra Yojana fulfils the working capital needs of businesses like these.

E Mudra: What Is It?

E-Mudra loan is a government scheme that offers financial assistance to small and micro business enterprises. The scheme was launched in 2015 by the Prime Minister of India, Narendra Modi. Any Indian citizen who wants to start or expand their business can apply for an E-Mudra loan. There is no minimum limit on the loan amount, and businesses can avail of up to ₹10 lakhs under this scheme. 

The main aim of this scheme is to provide easy access to credit for small businesses so that they can grow and create more employment opportunities. To be eligible for an E-Mudra loan, businesses must have a valid GST number or any business registration document and be registered with the MSME (Micro, Small and Medium Enterprises) Development Authority. Businesses can apply for an E-Mudra loan through any participating bank or financial institution.

E Mudra Loan Interest Rate is affordable as compared to other unsecured borrowing options. Overall, the E-Mudra scheme is a great option for small businesses that need access to capital to grow their business. It is quick and easy to apply for and offers competitive interest rates.

Eligibility for E Mudra Loan?

E-Mudra loans provide capital to small businesses at their initial stages or looking to expand their operations. It primarily caters to the needs of MSME sectors. The following businesses shall be considered for Eligibility For E Mudra Loan:

  • Artisans
  • Small manufacturers
  • Shopkeepers
  • Fruit and vegetable dealers
  • Individuals engaged in the agricultural field
  • Truck operators
  • Food service units
  • Any other person engaged in processing, manufacturing, trading or service sector

Apart from the above, the following are the criteria for Eligibility For E Mudra Loan:

  • Minimum age: 18 years
  • Maximum age: 65 years
  • Borrowers: Borrowers can be either a new or existing MSME enterprise. 
  • Collateral requirements: There is no requirement to provide a collateral security or third-party guarantee to avail of the Mudra loans
  • Lending Institutions: Mudra loans can be availed of from any public sector banks, private sector banks, microfinance institutions, scheduled commercial banks, regional rural banks or non-banking financial companies.

The government has preset criteria to decide which establishments qualify for being an MSME enterprise. The following are the criteria for determining whether an establishment qualifies for being an MSME enterprise:


Investment in plant and machinery should not be more than

Annual turnover should not be more than

Micro Enterprise

₹1 crore

₹5 crores

Small Enterprise

₹10 crores

₹50 crores

Medium Enterprise

₹50 crores

₹250 crores

Therefore, if an establishment satisfies the above criteria, then the owner can apply for MSME registration. To get registered as an MSME enterprise, the owner of the business needs to apply for UDYAM registration. Those already having Udyog Aadhaar registration can migrate to UDYAM registration.

Types of Mudra Loans

Having read about What E Mudra Loan is and its eligibility, it would be good to know of its various schemes. The PMMY has bifurcated the E-Mudra loans into 3 categories based on the size of the fund that can be borrowed. Following are the 3 schemes of E-Mudra Loans:

1. Shishu Yojana: This scheme is ideal for people who are willing to start a new business and require initial capital for the same. The amount of loan that can be borrowed under the Shishu Yojana is up to ₹50,000.

2. Kishor Yojana: This scheme is ideal for people who have already started their businesses and want capital for the smooth functioning of the operations. The amount of loan that can be borrowed under the Kishor Yojana is above ₹50,000 and up to ₹5 lakhs.

3. Tarun Yojana: This scheme is ideal for people who are looking to expand their operations. The amount of capital that can be borrowed under the Tarun Yojana is above ₹5 lakhs and up to ₹10 lakhs.

E Mudra Loan Apply: How to do it?

To apply for E-Mudra loans, owners can either file an online application or the offline application. Following are the steps for both methods of applying for E-Mudra loans.

E Mudra Loan Online Apply 

The following steps need to be followed in order to apply for an E-Mudra loan online:

  1. Visit the official website of the E-Mudra loan or the website of the bank or financial institution from where we wish to avail of the loan. 
  2. Fill in personal and business details as required in the application form.
  3. Upload all the required documents.
  4. Click on the ‘Submit’ button to submit the application form.
  5. Once the application is approved, the individual will receive an SMS and email notification from the bank or financial institution about the loan.

Applicants can also track their loan application status by logging into their accounts from the website.

Offline Application for E-Mudra Loans

The offline process for an E-Mudra loan application is not too different from the online process. However, it is available as an option for not-so-tech-savvy applicants. The following steps need to be followed to avail of an E-Mudra loan offline.

  1. Visit the nearest bank or financial institution that offers E-Mudra loans.
  2. Ask for the E-Mudra loan application form.
  3. Fill in the form with the personal and business details.
  4. Attach all the required documents.
  5. Submit the form to the bank officials.
  6. Once the application is approved, the applicant will receive an SMS and email notification from the bank or financial institution from which they have availed of the loan.

Applicants can also track our loan application status by logging into their account on the E-Mudra website or the website of the banking institution where they have applied for the loan.

Documents required for E-Mudra Loan

The following are the documents required for availing of the E-Mudra loan:

  • Passport-size photograph
  • Aadhar Card
  • PAN Card
  • Bank account statement for the last 6 months
  • Proof of business address
  • GST registration certificate
  • Business ownership proof (electricity bill, water bill, rent agreement)
  • Previous year's Income Tax Return (ITR) form
  • Financial statements for the last 2 years ( balance sheet, profit & loss account)
  • KYC documents (for both individuals and businesses)
  • Equipment purchase invoice (if the loan is availed for equipment purchase)
  • Partnership deed (if the business is a partnership firm)
  • Memorandum and Articles of Association (if the business is a private limited company)
  • Certificate of incorporation (if the business is a public limited company)
  • Udyam registration certificate

Popular banks for E-Mudra loan

Borrowers can avail of E-Mudra loan facilities from public sector banks, private sector banks, regional rural banks, scheduled commercial banks, microfinance institutions, as well as non-banking financial companies. Some of the most popular ones among these include:

  • SBI
  • HDFC Bank
  • ICICI Bank
  • Axis Bank
  • Kotak Mahindra Bank
  • Punjab National Bank
  • Yes Bank
  • IndusInd Bank
  • Deutsche Bank
  • Standard Chartered Bank

Benefits of E-Mudra Loan

E-Mudra loans have provided a much-needed boost to credit access for the MSME sectors. Following are the key advantages of E-Mudra loans that have made them popular among borrowers:

1. Quick and easy to apply for: Applying for an E-Mudra loan is a quick and simple process. People can either apply online or offline to avail of them. This benefits both the tech-savvy generation, who are willing to do everything online as well as the people who still prefer brick-and-mortar banking. 

2. No collateral or security deposit required: The requirement of collateral security or third-party guarantees has remained an obstacle for many borrowers. However, E-Mudra loans have removed this obstacle. E-Mudra loans are unsecured business loans, which means that they do not require any collateral or security deposit. This has increased the access to Mudra loans to a wide section of borrowers. 

3. Flexible repayment terms: The repayment terms for E-Mudra loans are flexible, and we can choose to repay our loan in monthly, quarterly, or semi-annual instalments. There is no prepayment penalty for early repayment of the loan.

4. Attractive interest rates: Unsecured loans carry a high-interest rate. This increases the cost of borrowing, thereby making it a less preferred choice among borrowers. However, the E Mudra Loan Interest Rate currently starts at 11.25% per annum. This provides credit to businesses at affordable rates. 

5. Multi-purpose usage: E-Mudra loans can be used for a variety of purposes, such as working capital, business expansion, and equipment purchases. Most other loans come with a restricted usage whereby the funds can be used only for a definite purpose. However, the multi-use benefit of E-Mudra loans makes them a preferred choice of the borrowers as they can use the funds for whatever business purpose they require.

6. E-Mudra loans are available from a wide range of banks and financial institutions: This makes it easy to find one that suits the applicants' needs. As there is a greater number of banks and financial institutions in the network of Mudra loans, a seamless flow and greater access to credit for the borrowers is ensured.

How to Repay our E-Mudra Loan?

When it comes to repayment, E-Mudra Loan offers great flexibility as the loan can be repaid in easy EMIs through any of the following channels:

1. Online repayment: Borrowers can log in to our account on the E-Mudra website and make the payment using their debit card or net banking facility. This is one of the most convenient methods of repaying Mudra loans.

2. Mobile App: The E-Mudra app (available on both Android and iOS) can be used for making payments towards the loan. Just download the application from the Google Play Store or Apple App Store to begin the loan repayment with ease.

3. Bank transfer: Borrowers can ask their banks to transfer the EMI amount from their account to the beneficiary account every month. This can be done by providing a standing instruction to the bank.

4. Post-dated cheques: Borrowers can submit post-dated cheques for the EMIs at their nearest E-Mudra branch. The amount will get debited when the cheques are presented as per the dates mentioned in the cheques.

5. Over the counter: If the borrowers don't want to repay a loan through any of the above methods, then they can simply make cash payments towards their E-Mudra Loan at any of the branches.

How to get an E-Mudra Loan?

E-Mudra Loan is a government-sponsored scheme that offers collateral-free loans of up to ₹10 lakh to small and micro enterprises. The objective of the scheme is to provide financial assistance to entrepreneurs so that they can establish or expand their businesses.

To apply for an E-Mudra Loan, applicants will need to approach a participating bank or financial institution. They will need to submit certain documents, including their business plan, KYC documents, and proof of income. Once the application is approved, the applicant will receive the loan amount within 7 days.

The repayment period for an E-Mudra Loan is 5 years. Borrowers can repay the loan through EMIs or a lump sum payment at the end of the loan tenure.

E-Mudra Loan is a great way to get financial assistance for small businesses. It is easy to apply for, and the repayment terms are flexible. So, if you are looking for a loan to start or expand your business, E-Mudra Loan could be the perfect option for you!

E-Mudra Loan Calculator

People can use an online EMI calculator to calculate our monthly EMIs for our E-Mudra loan. Before borrowing, interested individuals need to properly plan their repayment. For this, they need to determine the amount of borrowing, the E Mudra Loan Interest Rate and the tenure of the loan. A longer tenure will result in lower EMIs, but the borrowers will end up paying more interest over the life of the loan. Conversely, a shorter loan tenure will increase the loan EMIs, which can strain their finances and monthly budget.

So, if you are planning to apply for an SBI E-Mudra loan, business owners should make sure that they compare different offers and choose the one that best suits their needs. They can use an online EMI calculator to calculate their monthly repayments and plan their finances accordingly. All that needs to be done is to enter the loan amount, tenure and interest rate to calculate the amount of EMI as well as the total interest that they would be paying over the tenure of the loan. Further, it allows them to try various combinations whereby they can calculate the amount of EMI for varying tenures and loan amounts in just a few seconds. Through this, business owners can make an informed borrowing decision. 

The Bottom Line

E-Mudra loans are a quick and easy way to get funding for one's business. As per a report in the Economic Times, E-Mudra Loans have benefitted 34.42 crore beneficiaries by providing loans worth ₹18.60 lakh crores. It has generated huge employment opportunities for the people. Out of the total loans, 22% of the total loans have been provided to new entrepreneurs who have not availed of any loans since the inception of this scheme. Further, 51% of the total loans have been provided to SC/ST/OBC categories. Thus, it can be said that there is a seamless flow of credit across all sections of society.

Frequently Asked Questions

Q: Is there any subsidy available under the E-Mudra Yojana?

A: Currently, there is no subsidy available in the E-Mudra Yojana. However, if the loan proposal is linked to any of the Government schemes that offer subsidies, then the same can be availed of under the E-Mudra loans.

Q: What is an E-Mudra card?

A: An E-Mudra card is a credit product that allows borrowers to avail of credit in a seamless and hassle-free manner. It provides a working capital arrangement to the borrowers in the form of OD or CC. An E-Mudra card is essentially a RuPay debit card and can be used to withdraw cash from ATMs or make purchases using the Point of Sale machines. 

Q: Can we file a grievance if the E-Mudra loan application is rejected?

A: In case the E-Mudra loan application is rejected due to any lapse from the banking official, then a grievance can be registered with the zonal manager or the regional manager of the concerned bank. However, in case the loan application is rejected because the applicant fails to meet the eligibility criteria or due to insufficient documentation, then they shall have to fulfil the eligibility criteria for availing of the E-Mudra loan.

Q: Is life insurance required for availing of the E-Mudra loans? 

A: Life insurance is not a mandatory criterion for availing of the E-Mudra loans. However, if the terms and conditions of the lender require the applicant to have life insurance, then they will need to comply with the same. This is because the terms and conditions of lending under the E-Mudra Yojana are based on the lending policy of the respective lending institutions.

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