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What Are The Objectives Of MUDRA

by Byrne Anderson
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Contrary to popular opinion, micro enterprises play a huge role in the development of the Indian economy. Despite their importance, these enterprises have in the past constantly suffered from lack of access to funding. This hindered their development and prevented them from growing. However, with the introduction of the Pradhan Mantri Mudra Yojana (PMMY) and the subsequent creation of the MUDRA, micro enterprises have finally been given easy access to funding. Want to know more about MUDRA and its objectives? Continue reading to find out.

What Is MUDRA?

MUDRA is an acronym that stands for Micro Units Development and Refinance Agency. It is a Non-Banking Financial Corporation (NBFC) established under the Pradhan Mantri Mudra Yojana (PMMY).

MUDRA, also referred to by many as MUDRA bank, is basically a refinancing institution. What this essentially means is that MUDRA as an entity doesn’t offer any loans to micro enterprises directly. Instead, it offers loans to other partner banks, NBFCs, and Micro Financing Institutions (MFIs), who in turn offer e-Mudra Yojana loans to the micro enterprises.

What Are the Objectives of MUDRA?

Now that you know what MUDRA is, let’s take a look at some of the objectives of the institution.

1.       To Provide Funding for the Unfunded

The Pradhan Mantri Mudra Loan Yojana was created with the aim to provide ‘funding for the unfunded’. And MUDRA’s objective is to fulfill the aim underlined under the PMMY by nudging partner banks, NBFCs, and MFIs to offer e-Mudra Yojana loans to micro and small business units.

2.       To Encourage Self-Employment

Lack of access to funding is one of the primary reasons why individuals are hesitant to start up new business units. MUDRA is looking to encourage self-employment and the creation of new micro enterprises by providing easy funding.

3.       To Promote the Growth and Expansion of Existing Micro Enterprises

Many existing micro enterprises have either come to a standstill or are finding it difficult to expand their businesses. MUDRA’s objectives include promotion of growth, development, and expansion of existing micro enterprises by providing them with the required financial stimulus.

4.       To Bring Down the Cost of Financing

Even if micro enterprises are able to secure funding somehow, the interest burden can be quite high. This can end up stifling their growth. With the e-Mudra Yojana, the loans are offered at very attractive interest rates and on a need-basis, thereby reducing the interest burden significantly.

5.       To Provide Funding Based on the Growth Stage

Another one of the primary objectives of MUDRA is to provide loans based on the current growth stage that a micro business unit is in. For businesses that are just starting their journey, MUDRA offers loans of up to Rs. 50,000 under the ‘Shishu’ category.

For micro enterprises that are in need of funds for expansion or working capital requirements, e-Mudra Yojana loans ranging from Rs. 50,000 to Rs. 5 lakhs will be provided under the ‘Kishore’ category. And finally, well-established units can avail loans ranging from Rs. 5 lakhs to Rs. 10 lakhs under the ‘Tarun’ category.


The Pradhan Mantri Mudra Loan Yojana can help micro and small enterprises gain access to funding and take their business to greater heights. If you run one such business and are in need of financing, you could look into the details of this scheme to see if it may benefit you.

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