What is the MUDRA Scheme? What are its Features?

MUDRA stands for Micro-Units Development and Refinance Agency Limited. It’s a Non-Banking Financial Company (NBFC) that was set up by the government in April 2015 to provide financial support to the micro enterprises sector.


Image Source

One of the primary reasons behind establishing MUDRA was to provide the facility of institutional finance to small businesses that are involved in manufacturing, trading, or service segments in the industry. For the same reason, the PMMY scheme was launched, which stands for Pradhan Mantri MUDRA Yojana. Under this, any eligible small business owner can get a loan up to Rs. 10 lakhs.

The following are the main features of the MUDRA Yojana:

Micro Credit Scheme

Under the Micro Credit Scheme, Micro Financial Institutions (MFIs) can obtain financing for enhancing their purchasing power for the qualifying assets. It’s available for an individual or even a group of individuals who wants to set up a microenterprise.


MUDRA card is a special product designed to make credit easily accessible and usable. A person can use a MUDRA card as a credit card for the overdraft limit. However, they can also use it as a debit card by withdrawing money from the ATMs.

Credit Guarantee Fund Scheme

In a bid to reduce the credit risk for the lending institutions, the cabinet announced credit guarantee fund scheme under which it’s expected to provide up to Rs. 1,00,000 crores worth of loans.

Mahila Uddyami Scheme

As the name suggests, the Mahila Uddyami Scheme was specially designed for the welfare of the women. It helps women, self-help groups of women, and joint liability groups etc. to set up micro enterprises. All eligible women are provided special interest concessions under this scheme.