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Government Loan Schemes India 2026

Complete guide to govt-subsidised credit in India — MUDRA, CGTMSE, PMEGP, Stand-Up India, PSB 59-min, PM Vishwakarma, KCC, education loans, PMAY housing subsidy, and women-entrepreneur schemes. Plain-English, updated May 2026.

Schemes from Ministry of MSME + RBI + DFS + state governments

Schemes covered on this page

MUDRACGTMSEPMEGPStand-Up IndiaPSB 59 minVishwakarmaStree ShaktiKCCEducation loanPMAY

Quick guide — pick the right scheme

  • MUDRA — collateral-free up to ₹10L for micro businesses (Shishu/Kishore/Tarun)
  • CGTMSE — govt guarantees 75-85% of MSME loans up to ₹5 crore, no collateral
  • PMEGP — 15-35% direct subsidy on new manufacturing/service unit project cost
  • Stand-Up India — ₹10L–₹1cr for SC/ST/women entrepreneurs (greenfield only)
  • PM Vishwakarma — ₹1L + ₹2L at 5% for 18 traditional artisan trades
  • KCC (Kisan Credit Card) — 4% effective rate for farmers (cheapest formal credit)
  • PMAY interest subsidy — ₹2-6L upfront principal reduction on first-time home loans
  • Education loan — collateral-free up to ₹7.5L under CGFSEL, Section 80E deduction

Scheme-wise breakdown

1 of 10

MUDRA Loans (PMMY)

Micro Units Development & Refinance Agency Ltd

Pradhan Mantri Mudra Yojana — collateral-free credit up to ₹10 lakh for micro-enterprises. The single most-used scheme for small business credit in India (₹4 lakh crore+ disbursed cumulatively).

For whom
Micro businesses, self-employed, non-corporate non-farm
Ticket size
₹50,000 (Shishu) / ₹5 lakh (Kishore) / ₹10 lakh (Tarun)
Interest rate
8% – 12% p.a. (bank-determined)
Collateral
None up to ₹10 lakh
Key points
  • Shishu: up to ₹50,000 — for new businesses / kirana / tailoring / small services
  • Kishore: ₹50,001 – ₹5 lakh — for established businesses needing working capital
  • Tarun: ₹5,00,001 – ₹10 lakh — for expansion, machinery, larger working capital
  • Available at all PSU banks, RRBs, NBFCs, MFIs
  • No processing fee for Shishu loans
  • Linked to MUDRA card — like a debit card for working capital
Watch-out
Approval is bank-discretionary even though scheme is collateral-free. Strong CIBIL + viable business plan still matter. Many borrowers complain of rejection despite scheme advertising — escalate to district lead bank manager if unfairly denied.
2 of 10

CGTMSE — Credit Guarantee for MSMEs

Ministry of MSME + SIDBI

The credit guarantee that makes collateral-free MSME lending possible. Govt covers 75-85% of any default — letting banks lend at near-personal-loan rates without your shop/house as security.

For whom
Micro & Small Enterprises (manufacturing + service)
Ticket size
Up to ₹5 crore
Interest rate
Bank base rate + 2-3% (typically 10-14% p.a.)
Collateral
Zero — govt guarantees 75-85% of loan
Key points
  • Loans up to ₹5 crore covered (₹2 crore for borrowers in NE region)
  • Guarantee cover: 75% (general), 80% (women/NE), 85% (micro)
  • Eligibility: Micro/small enterprises with Udyam registration
  • Bank pays annual guarantee fee 0.37-1.35% (often passed to borrower)
  • Both manufacturing (investment in plant ≤ ₹50 cr) and service (≤ ₹50 cr) qualify
  • Excluded sectors: retail trade, educational/training institutions, agriculture (separate schemes)
Watch-out
Banks may add 1-2% guarantee fee to your interest rate. Always ask for the all-in cost. Also: claim process on default is slow — banks may still pressure you with recovery agents before invoking CGTMSE.
3 of 10

PMEGP — Prime Minister's Employment Generation Programme

Ministry of MSME (via KVIC + State KVI Boards + DICs)

Credit-linked subsidy scheme. Govt gives 15-35% of project cost as direct subsidy — among the highest grant components in any Indian small business scheme.

For whom
First-time entrepreneurs setting up manufacturing or service units
Ticket size
Up to ₹50 lakh (manufacturing) / ₹20 lakh (service)
Interest rate
Bank rate (typically 10-12% p.a.)
Collateral
None up to ₹10 lakh
Key points
  • Subsidy: 15% (urban general), 25% (rural general), 25% (urban SC/ST/OBC/minorities/women), 35% (rural SC/ST/OBC/minorities/women)
  • Your contribution: 5% (special) / 10% (general)
  • Bank loan: balance amount at standard MSME rates
  • 3-year lock-in: subsidy locked in margin money account; released after 3 yrs of business
  • Eligibility: 18+ yrs old, min 8th pass (above ₹10L project), no upper income limit
Watch-out
PMEGP DOES NOT fund existing units — only NEW units. Also, subsidy is locked for 3 years — if you close the business early, subsidy is recovered. Always confirm District Industries Centre (DIC) recommendation before approaching bank.
4 of 10

Stand-Up India

Department of Financial Services (Ministry of Finance)

Branded scheme to mandate that every PSU bank's every branch funds at least one SC/ST and one woman entrepreneur. Strong execution mandate — over 2 lakh borrowers cumulatively.

For whom
SC/ST and women entrepreneurs setting up greenfield enterprises
Ticket size
₹10 lakh – ₹1 crore
Interest rate
Base rate + 3% + tenure premium (typically 9-12% p.a.)
Collateral
Project assets + primary security; CGTMSE cover for collateral-free option
Key points
  • Eligibility: SC/ST or Woman (majority shareholder if company); 18+ yrs
  • Must be greenfield project (first business; new manufacturing/trading/service unit)
  • 75% of project cost financed; 25% your contribution (subsidised via state/Stand-Up India for SC/ST/women)
  • Repayment up to 7 yrs (18-month moratorium allowed)
  • Apply via standupmitra.in or directly at any PSU bank branch
Watch-out
Greenfield-only rule excludes existing businesses adding a unit. Also: trading-only businesses (pure retail) often face higher scrutiny than manufacturing/service.
5 of 10

PSB Loans in 59 Minutes (Jansamarth)

SIDBI + 12 PSU banks (now under Jansamarth portal)

Algorithm-driven loan in-principle approval in 59 minutes via Jansamarth portal. Final disbursal in 7-15 days. Uses GST data, ITR, bank statements for instant credit scoring.

For whom
MSMEs with GST + ITR + bank statements
Ticket size
₹1 lakh – ₹5 crore
Interest rate
8.50% – 13% p.a. (bank-determined)
Collateral
Mostly collateral-free under CGTMSE coverage
Key points
  • 59-minute in-principle sanction (online)
  • Final disbursal: 7-15 days after document submission to chosen bank
  • Multiple loan types: MSME, education, vehicle, agri, home
  • Pre-fills data from GST portal + ITR records (consent-based)
  • 12+ PSU banks competing — choose best rate offered
Watch-out
59-minute approval is INDICATIVE — bank still does final due diligence. ~30-40% of in-principle approvals get rejected/reduced at final stage. Don't commit to vendors purely on 59-min sanction letter.
6 of 10

PM Vishwakarma Yojana (2023)

Ministry of MSME

Launched Sept 2023. Subsidised credit + toolkit incentive + skill training for traditional trades — carpenters, blacksmiths, potters, weavers, tailors, washermen, barbers etc.

For whom
Traditional artisans & craftsmen — 18 trades covered
Ticket size
₹1 lakh first tranche + ₹2 lakh second tranche
Interest rate
5% p.a. (concessional)
Collateral
None
Key points
  • PM Vishwakarma certificate + ID after registration at pmvishwakarma.gov.in
  • Skill training: 5 days basic + 15 days advanced — ₹500/day stipend
  • Toolkit incentive: ₹15,000 voucher
  • Loan 1: ₹1L at 5%, 18-month tenure
  • Loan 2 (after Loan 1 repaid): ₹2L at 5%, 30-month tenure
  • Marketing support — digital + offline channels
Watch-out
Only the 18 listed trades qualify — verify your trade is on the official list. Loan disbursal requires district-level vetting; in some states it's been slow.
7 of 10

Stree Shakti Yojana

State Bank of India (SBI)

SBI's flagship scheme for women entrepreneurs. Concessional rate + relaxed margin requirements + bundled financial literacy training.

For whom
Women entrepreneurs (51%+ ownership)
Ticket size
₹50,000 – ₹2 crore
Interest rate
0.05-0.25% lower than SBI standard MSME rate
Collateral
CGTMSE cover for up to ₹50 lakh
Key points
  • Women must hold 51%+ shareholding/proprietorship
  • Margin reduced by 5% vs standard SBI MSME loans
  • Free entrepreneurship development training
  • Apply at any SBI branch — no special portal
  • Combinable with CGTMSE for collateral-free option
8 of 10

Kisan Credit Card (KCC)

RBI (operated via all PSU banks, RRBs, Cooperatives)

The cheapest formal credit in India — 4% effective rate post interest subvention. Working capital for crop, allied activities, post-harvest expenses, and consumption needs.

For whom
Farmers (own land or leaseholder), dairy/fishery/poultry rearers
Ticket size
₹1.6 lakh (without collateral) up to ₹3 lakh (with collateral)
Interest rate
4% effective (7% base − 3% govt interest subvention for timely repayment)
Collateral
None up to ₹1.6 lakh; hypothecation of crop + land record for higher
Key points
  • Loan limit based on scale of finance × area × crop pattern
  • Revolving credit — withdraw + repay anytime, like a credit card
  • Interest subvention 3% if repaid within due date (effective 4% net)
  • Prompt Repayment Incentive (PRI): additional 3% subvention if you pay before due date
  • Crop insurance auto-bundled at subsidised premium under PMFBY
  • Eligible: all farmers including tenant farmers & sharecroppers
Watch-out
If you default or pay late, the 3% subvention is forfeited — your effective rate jumps from 4% to 7%. Tenant farmers often face documentation hassles despite being legally eligible.
9 of 10

Education Loan (Vidyalakshmi Portal)

Department of Financial Services + IBA

Unified portal — Vidyalakshmi.gov.in — lets you apply to multiple banks via one form. Section 80E interest deduction (no upper cap) for 8 years post-moratorium.

For whom
Indian students for higher education in India or abroad
Ticket size
Up to ₹4 lakh (no collateral) / ₹7.5 lakh (with CGFSEL) / no upper cap with collateral
Interest rate
8.5% – 11% p.a. (Section 80E interest deduction available)
Collateral
None up to ₹7.5 lakh under CGFSEL; collateral for higher amounts
Key points
  • Govt premier institutes (IITs/IIMs/AIIMS/NITs/etc.) get easier approval + sometimes concession rate
  • Moratorium: course duration + 6-12 months (no EMI till you start earning)
  • Section 80E: full interest deduction from income tax (no cap, for 8 yrs post-moratorium)
  • PMRY Subsidy (10% interest subsidy) for EBPGY scheme — annual family income ≤ ₹4.5 lakh
  • Abroad studies: up to ₹1.5 crore at HDFC/Axis/SBI Global Ed Vantage
Watch-out
Co-applicant (parent/guardian) credit profile matters as much as student's profile. Loans for low-tier colleges + non-employable courses face high rejection — banks now use placement-rate scoring.
10 of 10

PMAY Housing Loan Interest Subsidy

Ministry of Housing & Urban Affairs

Credit-Linked Subsidy Scheme (CLSS) under PMAY — upfront subsidy credited as principal reduction. Saves ₹2-6 lakh on a typical home loan.

For whom
First-time home buyers with annual family income ≤ ₹18 lakh
Ticket size
Up to ₹6L principal subsidy eligible (varies by income slab)
Interest rate
Bank rate − 3% to 6.5% effective via subsidy
Collateral
Mortgage of the financed property (standard home loan)
Key points
  • EWS/LIG (income ≤ ₹6L): 6.5% interest subsidy on first ₹6L of loan (₹2.67L upfront credit)
  • MIG-I (₹6-12L): 4% subsidy on first ₹9L of loan (₹2.35L upfront credit)
  • MIG-II (₹12-18L): 3% subsidy on first ₹12L of loan (₹2.30L upfront credit)
  • Must be first-pucca-house. Spouse/dependent shouldn't own a house anywhere in India
  • Beneficiary identification via Aadhaar + family ration card/voter ID
Watch-out
CLSS sunset clauses keep changing in Union Budget. As of May 2026, the original scheme is wound down for MIG-II; EWS/LIG continues. Always verify current notification before relying on subsidy in cash flow plans.

Govt loan scheme FAQ

What is the cheapest government loan available?

Kisan Credit Card (KCC) at 4% effective rate is the cheapest formal credit in India — 7% base rate minus 3% govt interest subvention for timely repayment. For non-farmers, PM Vishwakarma Yojana (5% rate for 18 traditional trades) is next. Both schemes have small ticket sizes (₹1.6-3L for KCC, ₹1-2L for Vishwakarma) and are targeted at specific borrowers.

Can I get a MUDRA loan without any collateral?

Yes — MUDRA is designed to be collateral-free up to ₹10 lakh. The govt-backed credit guarantee absorbs the risk. However, banks still assess your CIBIL, business viability, and 6 months of bank statements. Approval is bank-discretionary. If unfairly rejected, escalate to the district lead bank manager or file complaint at PMMY portal.

What's the difference between MUDRA and CGTMSE?

MUDRA is a loan SCHEME (specific product, specific eligibility) — for micro businesses up to ₹10L. CGTMSE is a CREDIT GUARANTEE (covers any MSME loan up to ₹5 crore) — the bank gives any kind of MSME loan and the govt insures 75-85% of the default risk. CGTMSE enables collateral-free lending at much higher ticket sizes. They often combine — a Tarun MUDRA loan can be backed by CGTMSE guarantee.

Who is eligible for the 35% PMEGP subsidy?

Top 35% subsidy is for: SC/ST/OBC/minorities/women entrepreneurs setting up a NEW unit in a RURAL area. Urban general-category: 15%. Urban SC/ST/OBC/minorities/women: 25%. Rural general: 25%. The subsidy is credit-linked — released to your bank loan account, locked for 3 years, and recovered if you close the business early. Apply via DIC (District Industries Centre) or KVIC office.

Can I combine Stand-Up India with MUDRA?

No — Stand-Up India is for ₹10L+ and you can only get ONE of these per entrepreneur. Stand-Up India is for SC/ST/women setting up greenfield projects > ₹10L. MUDRA Shishu/Kishore/Tarun is for any borrower needing ≤ ₹10L. Choose based on your project cost. Stand-Up India can also be combined with CGTMSE for collateral-free higher amounts.

Are PSB Loans in 59 Minutes really approved in 59 minutes?

The 59-minute timeline is for IN-PRINCIPLE approval, not actual disbursal. The Jansamarth portal uses GST data + ITR + bank statements to give an indicative sanction letter in 59 minutes. Final disbursal still takes 7-15 days after document submission to your chosen bank. Approximately 30-40% of in-principle approvals get rejected or reduced at the final stage — don't commit to vendors based purely on the 59-minute letter.

What is the interest subsidy under PMAY for first-time home buyers?

PMAY-Urban CLSS (Credit-Linked Subsidy Scheme) gives an upfront subsidy credited to your loan principal. EWS/LIG (income ≤ ₹6L): 6.5% interest subsidy on first ₹6L of loan = ₹2.67L principal credit. MIG-I (₹6-12L income): 4% on first ₹9L = ₹2.35L credit. MIG-II (₹12-18L income): 3% on first ₹12L = ₹2.30L credit. Must be your first pucca house and spouse/dependent shouldn't own a house anywhere in India. Sunset clauses change yearly — verify current notification before relying on subsidy.

Is there any subsidy for women entrepreneurs starting a business?

Several: (1) Stand-Up India — ₹10L-1cr greenfield loans with concessional terms. (2) SBI Stree Shakti Yojana — 0.05-0.25% rate concession on standard MSME rates. (3) PMEGP — 25% urban / 35% rural subsidy on project cost. (4) Mahila Udyam Nidhi (SIDBI) — soft loans up to ₹10L at preferential rates. (5) State schemes — Karnataka, Telangana, Tamil Nadu, Gujarat have their own women entrepreneur funds. Check state portal in addition to central schemes.

Disclaimer:Interest rates, subsidy percentages, and eligibility for govt loan schemes are notified by ministries and revised periodically. This page is a current-as-of-May-2026 summary, not legal/financial advice. Always confirm scheme terms via udyamimitra.in, jansamarth.in, the respective Ministry portal, or your bank's nodal officer before applying.

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