Mudra Loan Interest Rate: why there is no single number
Mudra loan interest rates run roughly 8.5% to 12% per annum at public sector banks, and from about 10% upwards at private banks and NBFCs depending on risk profile. There is no government-fixed Mudra rate and the scheme carries no interest subsidy. Each lender prices the loan off its own benchmark and your profile, which is why the same application can be quoted differently at two branches.
Two things worth being clear about
- There is no such thing as guaranteed approval. The credit guarantee under this scheme protects the lender against a portion of a default. It is not approval for the borrower, and a default still lands on your credit record and is still recovered from you.
- The loan does not come from the government. MUDRA Ltd. refinances lending institutions and the loan is guaranteed under CGFMU. The loan itself comes from a bank, NBFC or MFI, and the sanction decision is that institution's alone.
What it costs per month
Pre-set to 8.5%, the reference starting rate for public sector bank lending under this scheme. There is no scheme-set rate - change it to the rate you have actually been quoted to see your real instalment, total interest and full repayment schedule.
Monthly EMI
₹10,258
₹5 Lakh at 8.50% for 5 years
Interest is 23% of the amount borrowed over this tenure.
Year-by-year repayment schedule
How each year splits between interest and principal. Early years are mostly interest, which is why prepaying early saves so much more than prepaying late.
| Year | Principal paid | Interest paid | Balance |
|---|---|---|---|
| 1 | ₹83,815 | ₹39,285 | ₹4,16,185 |
| 2 | ₹91,223 | ₹31,876 | ₹3,24,962 |
| 3 | ₹99,286 | ₹23,813 | ₹2,25,676 |
| 4 | ₹1,08,062 | ₹15,037 | ₹1,17,614 |
| 5 | ₹1,17,614 | ₹5,485 | ₹0 |
This calculator returns arithmetic on the figures you enter. It is not an offer, does not check your eligibility, and cannot predict the rate a lender will sanction. Loans Got Easy is an authorised Direct Selling Agent - we do not sanction, approve or disburse loans.
The scheme does not set the rate
There is no government-fixed Mudra rate and no interest subsidy. Each lender prices the loan off its own benchmark and your profile, so the same application can be priced differently at two branches. What PMMY provides is refinance support to lending institutions and credit guarantee cover through CGFMU. Neither of those is a subsidy to the borrower. This surprises applicants who have read that Mudra is a government scheme and inferred a concessional government rate. The benefit of the scheme is that the loan is available without collateral, not that it is cheap.
What the bands actually look like
On the rates published by lenders, SBI, Canara and Bank of Baroda typically sit between 8.5% and 10%. Punjab National Bank and Union Bank generally fall between 8.75% and 11%. Across public sector banks as a whole, roughly 8.4% to 12% covers most Mudra lending. Private banks and NBFCs commonly price from 10% to 15% or higher, reflecting both a different cost of funds and a willingness to lend to profiles public sector banks decline. Read all of these as bands. A single quoted number on a comparison page is almost always the floor of a range that few applicants reach.
What moves your rate within the band
Credit score first, and the bands are steep - a strong score routinely earns the lower end of a lender's range while a weak one adds a full point or more. Then the category, since larger exposures are priced differently from a ₹50,000 Shishu facility. Then how well your banking conduct and filed returns evidence the business, the tenure requested, and whether you are an existing customer of the bank. An existing relationship with clean conduct is worth more on a Mudra file than on most other products, because the branch can verify what it would otherwise have to assume.
Fees are part of the cost
Many lenders waive processing charges on Shishu entirely. Above ₹1 lakh, published structures commonly work out around ₹250 per lakh at rural and semi-urban branches and around ₹300 per lakh at urban and metro branches, varying by lender. On a short tenure the fee can matter more than a small rate difference; on a long one the reverse is usually true. Ask for the fee in writing before the sanction is issued. Loans Got Easy is a loan advisory and Direct Selling Agent. We help prepare and place the file. We do not sanction, approve or disburse, and we cannot influence a scheme outcome - that decision belongs to the lending institution.
Frequently Asked Questions
Roughly 8.5% to 12% per annum at public sector banks, and from about 10% upwards at private lenders and NBFCs. There is no government-fixed rate. The figure you are offered depends on your credit profile, the category, and the lender's own benchmark.
Want your file checked before it goes to a branch?
Share your details and a senior advisor will call you back within 24 hours.
Loans Got Easy is a loan advisory and Direct Selling Agent. We help prepare and place the file. We do not sanction, approve or disburse, and we cannot influence a scheme outcome - that decision belongs to the lending institution.