Executive Summary
- No single fixed Mudra rate exists — each lender sets its own rate within RBI norms
- Rates are typically benchmarked to the lender's MCLR or repo-linked lending rate plus a spread
- PSU banks generally offer lower Mudra rates than NBFC-MFIs
- Comparing actual quoted rates across 2–3 lenders before committing is worthwhile
Why There Is No Single Fixed Mudra Rate
A common misconception is that Mudra carries one official government-set interest rate — it does not. Each participating lender sets its own rate within RBI's broader lending guidelines, meaning the rate you're quoted depends on which bank or MFI you approach, not a fixed scheme-wide figure.
How Lenders Actually Benchmark the Rate
Most PSU banks price Mudra loans against their MCLR (Marginal Cost of Funds based Lending Rate) or repo-linked benchmark, plus a spread that reflects the borrower's risk profile and the specific tier. Shishu loans, given their smaller size and shorter typical tenure, sometimes carry marginally different pricing than Tarun loans from the same bank.
PSU Bank Rates vs NBFC-MFI Rates
PSU banks generally offer lower Mudra rates than NBFC-MFIs, reflecting their lower cost of funds — broadly consistent with the pattern covered in our PSU bank versus NBFC comparison. MFIs, however, often process Shishu-tier applications faster, which can be worth the rate trade-off for genuinely time-sensitive small funding needs.
Why Comparing Before Committing Is Worth the Time
Given the rate variation across lenders, obtaining quotes from two or three banks before committing — particularly for Kishore and Tarun tier loans where the absolute rupee difference matters more — is a worthwhile step that many first-time applicants skip simply by going with whichever bank they're already familiar with.