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Mudra loan interest rate and subsidy: what the scheme sets and what lenders set

There is no single Mudra loan interest rate. The scheme leaves rates deregulated, and each bank, NBFC or microfinance lender sets its own within RBI guidelines, usually linked to an external benchmark. Mudra itself carries no subsidy, though a loan linked to a capital-subsidy scheme can still qualify.

Loan products, rates, and eligibility are determined by the lenders on our panel. Capnix is not a lender and does not lend its own capital. We run your loan journey end to end.

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Is there a fixed Mudra loan interest rate?

No. The Mudra scheme does not set a rate. Mudra says interest rates are deregulated, and banks are advised to charge reasonable rates within the overall RBI guidelines (Mudra FAQ). So a "Mudra loan interest rate" is simply the rate your lender charges on that loan.

That is why two people with the same Shishu or Kishor loan can pay different rates. The lender prices the loan on its own cost of funds, the business and the loan size. The scheme does not cap the rate and does not fix a minimum.

What two lenders publish

Public sector banks publish how they price Mudra loans. These are the two we could read on 02-Oct-2026. Both show a formula and not a final percentage, because the benchmark moves.

Lender How it prices Mudra Fees printed on the page Source
Bank of Maharashtra Up to ₹10,00,000: RLLR + 2.25% + BSS. Above ₹10,00,000 to ₹20,00,000: RLLR + 2.00% + BSS Term loan: nil up to ₹5,00,000, then 1.00% of the sanctioned limit. Working capital: nil up to ₹5,00,000, then 0.35% a year. Prepayment: nil Bank of Maharashtra
State Bank of India "Competitive Pricing Linked to EBLR" Nil for Shishu and Kishore to micro units. For Tarun, 0.50% of the loan amount plus tax State Bank of India

RLLR means repo-linked lending rate, and EBLR means external benchmark based lending rate. BSS is a bank-specific spread. Bank of Maharashtra's page also prints its RLLR and BSS values, but the repo rate has moved since the benchmark was set, so ask the branch for today's figure (Bank of Maharashtra, Bank of Baroda). We do not print a computed percentage here, because a number from an old benchmark would mislead you.

Other costs exist too. Bank of Maharashtra also lists account handling charges that rise with the loan size, and it asks for insurance on the secured assets (Bank of Maharashtra). Ask every lender for the full list before you sign.

Why Mudra rates move with the repo rate

Most lenders now link floating rates to an external benchmark, usually RBI's repo rate. When the repo rate changes, your rate changes with it, after the lender's reset date. The spread above the benchmark is what the lender chooses for your business. A larger spread usually reflects higher risk or a smaller loan.

Fees on a Mudra loan

Fee What the sources say Source
Processing fee No scheme-wide rule. Each lender sets it. Examples above run from nil to 1.00% Bank of Maharashtra, State Bank of India
CGFMU guarantee fee The standard rate is 1% a year on the sanctioned amount in the first year, and on the outstanding amount from the next year. The lender may recover it from the borrower. At Bank of Maharashtra the borrower bears it NCGTC CGFMU FAQ, PIB press release
Prepayment charge For floating-rate business loans to individuals and micro and small enterprises sanctioned or renewed from 01-Jan-2026, most banks may not charge one. Smaller lenders may not charge one up to ₹50,00,000. Bank of Maharashtra charges nil RBI notification, 02-Jul-2025, Bank of Maharashtra

The CGFMU is the guarantee fund behind Mudra loans, run by the National Credit Guarantee Trustee Company. A lender may choose to apply for its cover, so not every loan carries the fee (PIB press release, NCGTC CGFMU FAQ). The Mudra vs CGTMSE comparison explains why the fee is not a CGTMSE fee.

Read the Key Facts Statement before you sign

Since 01-Oct-2024, every new MSME term loan comes with a Key Facts Statement from the lender (RBI notification, 15-Apr-2024). It shows the annual percentage rate (APR), which is the yearly cost of the loan including interest and all other charges (RBI notification). A lender cannot charge a fee that is missing from the statement unless you agree to it (RBI notification). Compare lenders on APR, not on the headline rate alone. The business loan charges guide lists the usual fees.

Is there a Mudra loan subsidy?

No. The Pradhan Mantri MUDRA Yojana carries no subsidy. Mudra says a loan linked to a government scheme that gives a capital subsidy is still eligible as a Mudra loan (Mudra FAQ).

Neither is part of Mudra. You need to apply to each one on its own terms.

Is a Mudra loan interest free?

No. You pay interest at the lender's rate. The scheme has no interest waiver (Mudra FAQ).

How to compare two Mudra offers

Put the offers side by side on the same four points, taken from each lender's Key Facts Statement:

A lender with a lower headline rate and a higher fee can cost more than one with a higher rate and no fee. The APR shows which.

Estimate your EMI

An EMI is the fixed monthly payment on a loan. The standard formula is EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1), where P is the loan, r is the monthly rate and n is the number of months (Standard loan EMI formula).

As an illustration only: a ₹5,00,000 loan at an assumed 12% a year over 60 months has an EMI of about ₹11,122. The 12% is our assumption for the sum. It is not a Mudra rate and not an offer. Use the Mudra loan EMI calculator with the rate in your own Key Facts Statement.

Your next step

Rates depend on how a lender reads your business. Run the free loan readiness check to see what a lender will see before you ask. Then read the Mudra loan guide, the four Mudra categories and how to apply. The government schemes hub compares the other schemes.

Frequently asked questions

There is no single rate. Lenders set it within RBI guidelines, usually off a benchmark such as the repo rate, with their own spread (Mudra FAQ, Bank of Maharashtra).

No. You pay interest, and the scheme has no waiver (Mudra FAQ).

Mudra yojana mein koi tay rate nahi hai. Har bank ya NBFC apna rate khud tay karta hai. Branch se current rate aur Key Facts Statement maangein (Mudra FAQ, RBI notification, 15-Apr-2024).

Mudra loan par koi subsidy nahi milti. Naye unit ke liye subsidy PMEGP scheme mein hoti hai (Mudra FAQ, PIB press release).

Bank of Maharashtra prices loans up to ₹10,00,000 at RLLR + 2.25% + BSS (Bank of Maharashtra). Other lenders use their own spreads. Ask for the Key Facts Statement for your exact loan.

It depends on the lender. State Bank of India charges nil for Shishu and Kishore and 0.50% plus tax for Tarun. Bank of Maharashtra charges nil up to ₹5,00,000 on term loans (State Bank of India, Bank of Maharashtra).

The lender pays the guarantee fee and may recover it from the borrower. Bank of Maharashtra passes it on (NCGTC CGFMU FAQ, PIB press release).

Banks may not take collateral on micro and small enterprise loans up to ₹20,00,000 sanctioned from 01-Apr-2026. Lenders usually keep a charge on the assets the loan buys (Bank of Maharashtra).

Sources

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