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Home / Finance / Banking / What Is Collateral Security In Mudra Loan?
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What Is Collateral Security In Mudra Loan?

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Recently I got to know about the MUDRA from a friend of mine and was curious to know more details about it. It is actually the abbreviation for Micro Units Development and Refinance Agency Ltd, an NBFC supporting development of the micro enterprise sector in the country. It helps or supports Banks/ MFIs/ NBFCs for lending to micro units having loan requirement upto 10 lakh. But the main question that arises here is

what is collateral security in mudra loan? So let me tell you about it as stated by the RBI.

Get NoBroker Home loan easily at a minimum interest rate and fulfill your dream of having your own house Get to know your monthly EMI easily with NoBroker EMI calculator   What is collateral security and who can apply for it?

Collateral security is any other security offered to get a certain credit facility. For example people give gold, houses or any other thing as primary security and take money against it.

Any Indian citizen who owns a business plan for a non-framing income generating activity can apply for this loan and get upto Rs 10 Lakh.

  Is MUDRA loan made collateral free?

As per the RBI norms, MUDRA loans have been made collateral free and to mitigate the issue of collateral, a Credit Guarantee Product is extended by developing a fund called Credit Guarantee Fund for Micro Units. So loans up to Rs 10 lakhs will not need any collateral from now onwards.

  What is the interest rate on Mudra Loan?

The interest rate on MUDRA loan is 7.30% onwards for Rs 10 Lakh extending for 7 years.

 

I hope these details answer

what is collateral security in mudra loan and its interest rate.

 

Read More:

How to apply MUDRA Loan?

Can I use property as collateral for a loan?

What questions to ask for when applying for home loan?

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