MUDRA Loan Eligibility 2026: Shishu vs Kishore vs Tarun Complete Guide

TL;DR

The Pradhan Mantri MUDRA Yojana (PMMY) offers three loan slabs to non-corporate, non-farm micro-enterprises: Shishu up to Rs 50,000, Kishore Rs 50,001 to Rs 5 lakh, and Tarun Rs 5 lakh to Rs 10 lakh. The scheme is administered through public sector banks, private banks, RRBs, MFIs, and NBFCs, refinanced by MUDRA (a SIDBI subsidiary). Pricing is at the lender's discretion within RBI norms — typically 8.5% to 12% from PSU banks and 11% to 15% from private banks and NBFCs. There is no collateral requirement up to Rs 10 lakh under MUDRA; the loans are covered under the Credit Guarantee Fund for Micro Units (CGFMU). The most commonly missed eligibility filter: the business must be non-corporate and non-farm — companies registered under the Companies Act and farming activities do not qualify.

What MUDRA actually is

MUDRA — Micro Units Development and Refinance Agency — is a refinance scheme run through SIDBI under the Pradhan Mantri MUDRA Yojana. The participating lenders (banks, NBFCs, MFIs) extend the loan to the borrower and then claim refinancing from MUDRA against the eligible portfolio. The borrower deals only with the participating lender — there is no direct application to MUDRA.

The scheme covers micro-enterprises in manufacturing, trading, services, and allied agricultural activities (excluding pure crop farming). Loans are extended without collateral up to Rs 10 lakh, with credit guarantee cover from CGFMU.

The three slabs

Shishu (up to Rs 50,000)

For brand-new businesses or very early-stage micro-enterprises. Documentation is minimal: KYC, business proof, and a one-page business plan typically suffice. Pricing is the lowest band (8.5% to 11% from PSU banks). Tenure typically 12 to 36 months. Best fit: a street vendor formalising the operation, a home-based service provider needing seed capital, a small repair shop building working capital.

Kishore (Rs 50,001 to Rs 5 lakh)

For established micro-enterprises needing growth capital. Documentation includes 12 months of bank statement, GST returns where applicable, and a basic business profile. Pricing 9% to 13%. Tenure 24 to 60 months. Best fit: an established trader expanding inventory, a service business buying tools or vehicles, a small manufacturer adding equipment.

Tarun (Rs 5 lakh to Rs 10 lakh)

For micro-enterprises with established cash flow needing larger capital. Documentation similar to Kishore plus 24 months of bank statement and ITR for the last 2 years (where available). Pricing 10% to 14%. Tenure 36 to 84 months. Best fit: a manufacturing unit upgrading machinery, a retail outlet relocating, a food service operation expanding.

Eligibility filters

Common to all three slabs:

1. The business must be non-corporate — sole proprietorship, partnership, LLP. Companies incorporated under the Companies Act do not qualify.
2. The business must be non-farm — pure crop farming is excluded; allied activities (poultry, dairy, fisheries) qualify.
3. The applicant must be 18 to 65 years of age.
4. CIBIL is checked but with a more lenient cutoff than commercial loans — typically 650+ acceptable, with the credit guarantee cover offsetting some of the risk.
5. The business activity must be income-generating — pure consumption financing is not covered.

There is no minimum business vintage for Shishu. Kishore typically requires 6 months of vintage. Tarun typically requires 12 months.

Documentation kit

For Shishu (up to Rs 50,000):

• KYC of applicant.
• Proof of business activity (Shop and Establishment licence, Udyam registration, GST certificate, or local trade licence).
• Quotation or estimate for the proposed expense.
• Photograph.

For Kishore (Rs 50,001 to Rs 5 lakh):

• Above plus 6 to 12 months of bank statement.
• GST returns last 6 months (if registered).
• Basic business profile.

For Tarun (Rs 5 lakh to Rs 10 lakh):

• Above plus 24 months of bank statement.
• ITR for last 2 years (where available).
• Audited financials (where applicable).
• Detailed business plan with cash-flow projection.

How to actually apply

The PMMY portal lists every participating bank, NBFC, and MFI. The application can be filed:

1. At a branch of any participating PSU bank (most common path; SBI, BoB, BoI, Canara, Union, PNB, etc.).
2. At a participating private bank branch (HDFC, ICICI, Axis, Kotak, Federal, Karur Vysya, etc.).
3. Through a participating NBFC or MFI, particularly for Shishu and small Kishore tickets.
4. Online through the Jan Samarth portal (www.jansamarth.in) — single-window application across multiple participating lenders.

The online channel is fastest for Shishu and small Kishore amounts. For Tarun, in-branch application is usually more reliable because the larger ticket requires underwriter review.

Pricing reality check

The MUDRA scheme caps the lender's processing fee but does not fix the interest rate. Pricing varies:

• PSU banks: 8.5% to 12% across the three slabs.
• Private banks: 11% to 14%.
• NBFCs and MFIs: 13% to 18%.
• Small Finance Banks: 12% to 17%.

The PSU pricing is the cheapest because of the lower cost of funds and the priority-sector lending target. If you have the time to file at a PSU branch, you usually save 2 to 4 percentage points versus an NBFC route.

Compliance & RBI context

MUDRA loans are part of the priority-sector framework. The RBI Fair Practice Code (rbi-2007-fair-practice-code) and the Digital Lending Guidelines (rbi-2022-dl-guidelines) apply equally — KFS, written rejection reasons, and transparent fee disclosure are mandatory. The 2024 transparency-in-aggregation update (rbi-2024-dl-update) requires LSPs to disclose every available offer when surfacing MUDRA options across multiple lenders. CGFMU credit guarantee cover is automatic for eligible MUDRA loans up to Rs 10 lakh.

Founder verdict

For a genuine micro-enterprise — sole proprietor or small partnership with under Rs 1 crore turnover — MUDRA is almost always the cheapest formal credit option in India. The friction is application speed: PSU branches can take 4 to 8 weeks. Our standard advice: file the MUDRA application at your nearest PSU branch on day 1, and in parallel apply for a private bank or NBFC business loan as a backup. If the MUDRA application sanctions in time, take it (cheaper). If it does not, the parallel application keeps your cash-flow plan on track. — Jay Patel, Co-founder, MoneyMatrixHub

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