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Micro Entrepreneurs Scheme

loan for micro entrepreneurs under pm mudra yojana

Learn more about our Micro Entrepreneurs Scheme under Pradhan Mantri "MUDRA" Yojana.

Micro Entrepreneurs Scheme

In line with the initiatives of the Prime Minister and as per the recommendations of RBI, we are glad to announce the exclusive scheme for Micro Entrepreneurs under the Pradhan Mantri "MUDRA" Yojana. This scheme helps the micro manufacturing and service enterprises in rural, semi-urban and urban areas.

Scheme Objective
To cater to the needs of Micro Entrepreneurs under Pradhan Mantri "MUDRA" Yojana.
Eligible persons
Individual / Proprietorship / Partnership Firm.
Eligible activities
Both Micro manufacturing / service enterprises in rural, semi-urban and urban areas.
Quantum of Loan
Maximum loan amount Rs. 10 Lakhs. To signify the stage of growth / development, the loan product is named as a) Shishu - Covering loans up to Rs. 50,000.00, b) Kishore - Covering loans above Rs. 50,000.00 and up to Rs. 5 Lakhs, c) Tarun - Covering loans above Rs. 5 Lakhs and up to Rs. 10 Lakhs.
Purpose of Advance
To meet working capital / Capex requirements of Micro (Manufacturing / Service) Enterprises.
Nature of Advance
i. Term loan (for capex requirements), ii. For Working Capital purpose - a) Overdraft (Running / operative account) - renewable every year. b) Overdraft (Reducing balance method) - to be reviewed annually, iii. The General Credit Card loans can also be considered under the scheme.
Form of Disbursement
In case of Term Loan, the payment should be made directly to the supplier of the asset financed by the bank or to the provider of services.
Account credit by way of reimbursement of loan (maximum not exceeding 30% of the loan amount) against assets already acquired may be approved by the sanctioning authority, in case of term loans, where the assets are already acquired from alternative resources including own funds not earlier than one year from the date of disbursement of the loan. In such cases, end use vouchers / receipts / self declarations given by the borrower, should be obtained and certified by branch heads confirming verification and availability of such assets.
20% of the Working Capital limit sanctioned to Micro Enterprises with a maximum credit of Rs. 10,000.00 will be the eligible components of MUDRA card. The mechanism of issuance of MUDRA card will be circulated shortly.
Repayment
TL / OD (Reducing balance method) shall be fixed on the basis of income generation of the borrower (individual / concern / firm) and the repayment period shall be restricted to the maximum of 84 monthly instalments (inclusive of Instalment holiday if any of a maximum of 6 months).
Where OD limit (Reducing Balance Method) is permitted for working capital requirement, the annual reduction schedule should normally be evenly distributed over the total repayment, depending on the repayment capacity of the borrower.
Overdraft Limit: One year (To be renewed once in a year well before the due date).
Obtention of Financial Statements
Not compulsory, unless the business requires compulsory audit under any of the Acts:-
Repayment of the debt plus interest should be assessed by obtaining details of existing income as well as future income of the applicant.
Sources of income should be verifiable such as business income, rental income, agriculture income and other income.
Primary Security
Working Capital Limits - Stocks and receivables.
Term loans - Assets required / created out of our Bank loan.
Collateral Security
Collateral security or third party guarantee (guarantee of any person other than the partners) should not be insisted. At the same time, the loans sanctioned under PMMY are to be covered under CGS (Credit Guarantee Scheme of Credit Guarantee Fund Trust for Micro and Small Enterprises. The loan sanctioned to retail trade cannot be covered under CGTMSE). For the loans above Rs. 2 Lakhs, PAN is mandatory to cover under CGS of CGTMSE
Margin
Overdraft for working capital purpose - Nil.
Term loan (for capex) - 20% of the relevant assets.
Submission of Stock statements
To be obtained at the time of initial sanction/ at each renewal where the limit sanctioned is for Working capital purpose.
Periodical Submission of Stock Statements thereafter is waived.
Branch should ensure that the borrower routes all the business transactions through the working capital limit. An undertaking letter to this effect should be obtained from the borrower and the branch has to monitor the same.
Branch should allow the over draft facility only for the working capital of the business and each debit operations should be closely monitored by the branch.
Branch officials should visit borrower's place initially at the time of sanction / each renewal and once in quarter thereafter to ensure a) the availability of fixed assets created out of Term loan. b) the sufficient chargeable current assets of stocks and receivables so as to cover our Working capital limit. c) satisfactory operations and smooth functioning of the unit.
Godown / Unit Verification Register should be maintained by the branch wherein details of periodic visit and observations regarding continuity of business activity and availability of assets financed by the Bank should be recorded.
Insurance
Primary Security:
i) Fixed assets acquired under our Bank Finance should be insured.
ii) Stock - Stock at different places should be insured for the full value with standard bank clause with correct address of storage places.
Rate of Interest
Rate of interest as applicable to TMB MSME scheme is to be applied. The details are given below.
Penal Interest
Any irregularity / default in repayment will attract penal interest of 1% p.a. over and above the applicable rate of interest.
Requisite
1) A separate application form designed for the loan sanctioned under PMMY should be obtained from the applicant.
2) For obtention of details and documents in one stroke, the checklist is attached with the loan application form.
Documentation
Usual documents as per our Bank norms.
Processing Charges
Term Loans: 1.00% of the loan amount without any maximum cap + taxes as applicable.
Overdrafts: 0.50% of the OD Limit + taxes as applicable without any maximum cap both for fresh sanctions and Renewals.
Prepayment charges
Nil.
Account turnover in case of OD (continuing limits)
The party should deal with us and route the operations through the account with us.
Documentation Charges
Nil.
Godown Verification Charges
Nil.

All the above Terms and Conditions are subject to change and sanctioning of the loans is at the sole discretion of the Bank. Goods & Service Tax (GST) on All Service Charges extra wherever applicable.

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