A Comprehensive Overview of the Shishu Mudra Loan Scheme

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Shishu Mudra Loan

Shishu Mudra Loan

Shishu Mudra Loan: The Shishu Mudra Loan scheme is a pioneering initiative aimed at providing financial support to individual micro-enterprises engaged in manufacturing, trading, and the service sector. The scheme is designed to cater to the working capital requirements of eligible applicants, offering a need-based term loan with simplified processes and digital onboarding.

Loan Details:

  1. Loan Quantum: The maximum loan amount under the Shishu Mudra Loan scheme is Rs. 50,000.
  2. Margin: No margin is required for availing the loan.
  3. Primary Security: The loan is secured through the hypothecation of stocks, book debts, and other assets, both present and future, created or purchased using bank finance.
  4. Collateral Security: No collateral security is needed for this loan.
  5. Guarantee: No external guarantee is required.
  6. Interest Rate: The applicable interest rate is EBLR + 1.25%, with penal interest as applicable.
  7. Repayment: The loan is to be repaid within a maximum period of 36 months through equated monthly instalments (EMIs). There is no moratorium period, and applicants can choose a repayment tenure between 12 to 36 months.
  8. Processing Charges: There are no processing charges for this loan.
  9. Documentation Charges & Convenience Fee: A nominal documentation charge of Rs. 950 + GST, along with actual stamp duty, is auto-recovered at the time of disbursement.

Eligibility Criteria:

  1. All individual micro-enterprises engaged in manufacturing, trading, and the service sector are eligible.
  2. Applicants should not be defaulters in any bank or financial institution.

Loan Process:

  1. Documentation: Customers are prompted to execute documents digitally through Aadhaar-based OTP systems on the NeSL platform.
  2. Renewal of Limit: The loan limit is renewable annually as per extant guidelines.
  3. Onboarding: Customer-friendly onboarding is facilitated through the bank’s website, net banking, and mobile app.
  4. Document Submission: No physical document submission is required.
  5. Branch Visit: Physical visits to branches are not mandatory, streamlining the application process.
  6. Turnaround Time (TAT): The loan sanction is automated, with approval within 5-7 minutes.
  7. Geotagging Tools: Geotagging tools are used to verify the location of the business unit, enhancing the verification process.
  8. Fully Automated Process: The entire process, from sanction to disbursal, is fully automated and digitized, ensuring quick and efficient service to micro-entrepreneurs.

Other Features:

  1. Customer-Friendly Approach: The scheme prioritizes a customer-friendly approach to enhance accessibility and ease of availing loans.
  2. NPA Classification: Extant prudential norms on income recognition, asset classification, and provisioning apply to loans granted under the Digital Shishu Mudra STP scheme.
  3. Uniform Interest Rates: Interest rates are charged uniformly, aligning with those applicable to general MSME advances.


The Shishu Mudra Loan scheme stands as a beacon of financial empowerment for individual micro-enterprises, providing a streamlined and digitized process to ensure quick and hassle-free access to working capital. The scheme’s customer-friendly approach, coupled with the innovative use of technology, demonstrates a commitment to fostering entrepreneurship at the grassroots level.

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