Indian Bank Mudra Loan: Eligibility, Limits and How to Apply
Reviewed by: WeCredit Research Team
Indian Bank offers Mudra loans under the Pradhan Mantri Mudra Yojana for small non-farm businesses. Its published products are an online Shishu loan of Rs. 10,000 to Rs. 50,000 for pre-selected existing customers, and a Tarun Plus loan above Rs. 10 lakh and up to Rs. 20 lakh for borrowers who have already repaid a Tarun loan.
Quick answer: if you already bank with Indian Bank, check the Apply Loan tab in internet or mobile banking for the instant Shishu offer. For a larger Mudra loan, apply through the bank’s online lead form or your branch. WeCredit does not sanction government scheme loans. Confirm current terms on indianbank.bank.in before you apply.
Indian Bank Mudra Loan at a Glance
| Item | Online Shishu Mudra | Mudra Tarun Plus |
|---|---|---|
| Loan amount | Rs. 10,000 to Rs. 50,000 | Above Rs. 10 lakh, up to Rs. 20 lakh |
| Who it is for | Pre-selected existing customers: individuals and proprietary firms, age above 18 and up to 60 | Entrepreneurs who have availed and successfully repaid a Tarun loan (Rs. 5 lakh to Rs. 10 lakh) |
| Type of loan | Term loan only | Term loan or working capital, need based |
| Margin | Nil | 20% on the asset or machinery cost (term loan); 20% on stocks and book debts (working capital) |
| Collateral | Not stated in the scheme guidelines | Nil collateral; loan to be covered under CGTMSE/CGFMU, with the premium borne by the borrower |
| Interest rate | Repo + 4.40% a year | Repo-linked: the bank’s page shows repo 5.25% + 2.70% prime spread + 2.05% other spread = 10.00% |
| Tenure | 24 to 60 EMIs | Term loan up to 60 months; working capital reviewed annually |
| Processing and documentation fee | Nil processing, documentation and inspection fee | As per the bank’s service charges circular |
| How to apply | Internet banking, mobile banking or the bank website | Apply For Loan form on the bank website |
Both products sit inside the national scheme. The Government describes the Pradhan Mantri Mudra Yojana as covering non-corporate, non-farm micro and small enterprises, with collateral-free loans up to Rs. 20 lakh. Each bank publishes its own pricing and conditions, so terms can change. Other options are listed in the government loan schemes hub.
Mudra Categories and Where Indian Bank Fits
| Category | Loan size under PMMY | Indian Bank product |
|---|---|---|
| Shishu | Up to Rs. 50,000 | Online Shishu Mudra loan for pre-selected customers |
| Kishor | Above Rs. 50,000 to Rs. 5 lakh | Ask your branch for current terms |
| Tarun | Above Rs. 5 lakh to Rs. 10 lakh | Ask your branch for current terms. A repaid Tarun loan is the entry ticket for Tarun Plus |
| Tarun Plus | Above Rs. 10 lakh to Rs. 20 lakh | Dedicated Mudra Tarun Plus product |
The Rs. 20 lakh Tarun Plus limit, announced in the Union Budget, took effect on 24 October 2024, and the Credit Guarantee Fund for Micro Units now covers the enhanced loans.
Eligibility for the Online Shishu Loan
The bank lists these conditions for its digital Shishu product, launched under its Project Wave:
- You are an Indian resident individual or proprietor, aged above 18 and up to 60 years. Staff and government salaried customers are outside the target group.
- You have been an Indian Bank customer for at least 12 months, with a savings or current account in a single mode of operation.
- Your KYC (C-KYC or e-KYC) is complete.
- Your account is not an NPA now and was not in the past 2 years.
- You have no other business loan from Indian Bank on the date of application.
- Your CIBIL score is 730 or more, or you have no credit history (shown as -1).
- The money is for a genuine business purpose, including a new manufacturing, service or trading business.
The offer is pre-selected. The bank selects customers on age, credit score and transaction history, so you may not see it in your app even if you meet the list above.
Eligibility for Mudra Tarun Plus
The bank’s Tarun Plus page sets one clear eligibility rule: you must have availed and successfully repaid earlier loans under the Tarun category (Mudra loans above Rs. 5 lakh and up to Rs. 10 lakh). First-time borrowers should plan for the smaller categories first. Beyond that, the lender runs its usual appraisal. A term loan is assessed as the machinery or asset cost less your 20% margin, subject to the debt service coverage ratio. A working capital limit is assessed by the turnover method under the bank’s credit policy. For the scheme-level rules, read our explainer on the Mudra Tarun Plus loan.
Documents You Need
For the online Shishu loan, the bank lists:
- PAN card and Aadhaar
- Udyam Registration Certificate, with the mobile number matching the bank’s records
- A valid email address
- An active mobile number linked to your savings or current account
- A selfie taken at your business location, as part of the digital process
For Tarun Plus, the bank’s page does not publish a document list. Expect to be asked for KYC, proof of your business and its approvals, and the papers behind the asset you want to buy, since the page refers to KYC and anti-money-laundering compliance and statutory approvals. Ask the branch for the exact checklist before you visit.
How to Apply: Step by Step
Online Shishu loan
- Log in to Indian Bank internet banking or the mobile banking app and open the Apply Loan tab. The offer can also be reached from the bank website.
- Open the Shishu Mudra offer. If you are not pre-selected, the offer will not appear.
- Choose an amount between Rs. 10,000 and Rs. 50,000 and a tenure of 24 to 60 EMIs.
- Complete e-KYC, confirm your Udyam details and take the selfie at your business location.
- Sign electronically. The borrower pays the e-stamp and e-signing charges, and the CIBIL charge.
- Check the repo-linked rate and your EMI before you confirm.
Tarun Plus
- Confirm that your earlier Tarun loan is fully repaid and that your account is regular.
- Open the Apply For Loan form on the bank’s Tarun Plus page and fill in your business details.
- Keep KYC, business and project papers ready, as the bank may ask for them.
- Wait for appraisal. For a term loan, the bank pays the supplier directly by DD, NEFT or RTGS rather than handing you cash.
- Read the sanction letter for the rate, spreads, fees, margin and CGTMSE or CGFMU premium before you sign.
Interest Rate and Charges
Indian Bank prices both products against the RBI repo rate. The Shishu loan is repo plus 4.40% a year, so your EMI can change when repo changes. The Tarun Plus page splits its 10.00% into repo (5.25%), a prime spread (2.70%) and an other spread (2.05%). Because repo moves over time, treat 10.00% as a guide to the spread structure rather than a quote, and ask the bank for your actual rate in writing.
Charges differ. The Shishu loan has nil processing, documentation and inspection fees and no prepayment or foreclosure charges. You still pay e-stamp, e-signing and CIBIL charges, plus the CGTMSE premium and annual service fee. To see how the CGTMSE guarantee fee is set, read our explainer. The Tarun Plus page says processing, documentation and other charges follow the bank’s service charges circular and gives no figure.
Worked Example: What the EMI Looks Like
These figures are illustrations at an assumed 10% a year, not a bank quote. Your actual rate depends on the repo rate on the day you borrow and on the bank’s assessment.
| Loan | Assumed rate | Tenure | Approx. EMI | Total interest |
|---|---|---|---|---|
| Rs. 50,000 Shishu | 10% a year | 36 months | Rs. 1,613 | Rs. 8,081 |
| Rs. 50,000 Shishu | 10% a year | 60 months | Rs. 1,062 | Rs. 13,741 |
| Rs. 15 lakh Tarun Plus | 10% a year | 60 months | Rs. 31,871 | Rs. 4,12,234 |
The same Rs. 50,000 costs about Rs. 5,660 more in interest if you stretch it from 36 to 60 months. Choose the shortest tenure your monthly cash flow can carry.
Is This Loan Right for You? A Quick Checklist
- I have held an Indian Bank savings or current account for at least 12 months with no NPA history in the past 2 years (for Shishu).
- My CIBIL score is 730 or above, or I have no credit history.
- I have a Udyam Registration Certificate and my mobile number matches the bank’s records.
- My need is Rs. 50,000 or less, or I have repaid a Tarun loan and need Rs. 10 lakh to Rs. 20 lakh.
- I can pay the e-stamp, e-signing, CIBIL and CGTMSE charges, and I can handle an EMI that moves with the repo rate.
- I am not a government salaried employee or staff member, if I am applying for the online Shishu loan.
If you answered no to the first two points, speak to the branch about the regular Mudra route or compare other lenders before you apply.
Why Applications Stall and What to Do
| Likely reason | What to do |
|---|---|
| Not pre-selected for the online Shishu offer | Ask your branch about a regular Mudra application |
| Account less than 12 months old | Wait until the account has a year of activity |
| Account classified as NPA in the past 2 years | Regularise the account and wait for the look-back period to pass |
| CIBIL score below 730 with a credit history | Clear overdues and recheck your score before applying again |
| Existing business loan with Indian Bank | The Shishu product is not offered if you already hold one |
| Udyam mobile number does not match the bank’s records | Update the number with the bank or on Udyam first |
| Tarun loan not fully repaid (for Tarun Plus) | Close the Tarun loan and ask for the repayment confirmation |
| Weak turnover or debt service coverage | Prepare bank statements and a realistic project estimate |
The bank does not publish a rejection list, so the table above follows from its published eligibility conditions.
Indian Bank Products vs the General Mudra Rules
| Point | Indian Bank product | General PMMY rule (PIB) |
|---|---|---|
| Who can borrow | Pre-selected existing customers (Shishu) or repeat Tarun borrowers (Tarun Plus) | Non-corporate, non-farm micro and small enterprises |
| Loan size | Rs. 10,000 to Rs. 50,000 online; Rs. 10 lakh to Rs. 20 lakh for Tarun Plus | Up to Rs. 50,000 (Shishu) to Rs. 20 lakh (Tarun Plus) |
| Collateral | Nil on Tarun Plus, with CGTMSE/CGFMU cover | Collateral-free loans up to Rs. 20 lakh |
| Credit guarantee | Premium borne by the borrower | CGFMU covers the enhanced loans |
Common Mistakes
- Expecting the instant Shishu loan without checking whether the offer appears for your account.
- Applying for Tarun Plus without a fully repaid Tarun loan.
- Quoting 10.00% as a fixed rate. The rate moves with repo.
- Ignoring the borrower-paid CGTMSE premium, e-stamp and CIBIL charges when you compare offers.
- Using a mobile number on Udyam that differs from the one the bank holds.
- Using look-alike websites. Apply only through indianbank.bank.in, its apps or a branch.
Where this fits: Mudra is one of several options for small businesses. Other schemes may suit your business better, and remember that WeCredit does not sanction government scheme loans. Always confirm details with Indian Bank and the official sources below.
Frequently Asked Questions
What is the maximum Indian Bank Mudra loan?
Up to Rs. 20 lakh under Mudra Tarun Plus, for borrowers who have repaid a Tarun loan. The online Shishu loan is up to Rs. 50,000.
Can new customers get the online Shishu Mudra loan?
The bank requires you to be an existing customer for at least 12 months and pre-selected on age, credit score and transaction history.
What CIBIL score does Indian Bank need for the Shishu loan?
A score of 730 or more, or no credit history (shown as -1). The Tarun Plus page states no cut-off.
Is collateral needed?
The Tarun Plus page states nil collateral, with the loan covered under CGTMSE/CGFMU. The Shishu guidelines do not state collateral, so ask the bank.
What is the interest rate?
The Shishu loan is repo plus 4.40% a year. Tarun Plus is repo plus spreads that added up to 10.00% on the bank’s page. The rate can change with repo.
How long can I take to repay?
Shishu: 24 to 60 EMIs. Tarun Plus term loans: up to 60 months.
Are there processing fees?
The Shishu loan has nil processing, documentation and inspection fees, but you pay e-stamp, e-signing, CIBIL and CGTMSE charges. Tarun Plus charges follow the bank’s service charges circular.
Which documents do I need for the online loan?
PAN, Aadhaar, Udyam Registration Certificate, a valid email, an active mobile number linked to your account, and a selfie at your business location.
Is the Mudra scheme still running?
Yes. The Government’s April 2026 backgrounder on 11 years of PMMY presents the scheme as ongoing, and Indian Bank’s Mudra pages were updated in July and August 2026.
