Weaver MUDRA Scheme

Scheme Introduction: A Brief Overview

Handloom weaving is an important source of income for many families in India. However, weavers often face money problems when buying yarn, dyes, raw materials, looms and other equipment for their work. To help them, the Government of India introduced the Weaver MUDRA Scheme (WMS), also known as the Concessional Credit Scheme, under the National Handloom Development Programme (NHDP). Through this scheme, individual weavers, weaver entrepreneurs, Self-Help Groups (SHGs), Joint Liability Groups (JLGs) and eligible handloom organisations can get bank loans for their work. Individual weavers can get margin money assistance of 20% of the loan amount, up to ₹25,000. Eligible handloom organisations can get up to ₹20 lakh as margin money assistance, along with loans at a 6% interest rate for three years.

The concessional credit component was approved on 24 September 2013. Later, on 28 June 2016, the Weaver MUDRA model was announced to help more handloom weavers get bank loans. The scheme is implemented by the Office of the Development Commissioner (Handlooms) under the Ministry of Textiles, Government of India. Its main aim is to provide affordable loans to weavers, reduce their dependence on private moneylenders and help them continue and improve their work.

Under the Weaver MUDRA Scheme, weavers can get loans through participating banks, such as commercial banks, Regional Rural Banks and cooperative banks. Loans up to ₹10 lakh are called MUDRA loans, while loans above ₹10 lakh come under the Concessional Credit category. Weavers can use the loan money to buy yarn, dyes and other materials, pay wages and meet daily work expenses. They can also use it to buy new looms, tools and equipment.

The scheme provides different benefits to individual weavers and handloom organisations. Individual weavers and weaver entrepreneurs can get 20% of the loan amount as margin money assistance, up to ₹25,000. Eligible handloom organisations can get 20% of the loan amount, up to ₹20 lakh. The amount is calculated at ₹2 lakh for every 100 weavers or workers, subject to the scheme rules. These organisations can also get loans at a 6% interest rate for three years. The government provides interest subsidy up to the prescribed limit of 7% and pays the applicable credit guarantee fee for up to three years.

Individual handloom weavers, weaver entrepreneurs, SHGs and JLGs involved in handloom work can apply under the scheme. Eligible organisations include Primary Handloom Weavers' Cooperative Societies, Apex Handloom Weavers' Cooperative Societies, State Handloom Corporations and Handloom Producer Companies. Eligible groups formed by weavers in Mega Handloom Clusters and Handloom Parks can also apply. Individual applicants need to provide proof of their handloom work, such as a Pehchan Card, Yarn Passbook or State Government identity card. Organisations need to submit their registration certificate and financial documents. The bank checks the applicant's details and ability to repay the loan before approving it.

To apply, eligible weavers and organisations need to contact a participating bank or get help from their nearest Weavers' Service Centre (WSC) or State Handloom Department. They must fill out the bank's loan application form and attach the required documents. The bank checks the application and decides whether to approve the loan. As per the revised guidelines, the bank should issue the loan sanction letter within one month of receiving the application. After the loan is given, the bank submits the claim for government assistance through the Handloom Weaver MUDRA Portal, developed with Punjab National Bank (PNB). Approved margin money is deposited directly into the beneficiary's loan account, while applicable interest subsidy and credit guarantee fee support are given to the bank.

For help or information about the scheme, handloom weavers can call the Bunkar Mitra Handloom Helpline at 1800-208-9988 (toll-free). The helpline is available every day from 10:00 AM to 6:00 PM. Support is provided in Hindi, English, Tamil, Telugu, Bengali, Kannada and Assamese.

The Central Government also runs the Pradhan Mantri Mudra Yojana (PMMY), which provides collateral-free loans to small and micro businesses across different sectors to help them start or expand their business activities. Under this scheme, eligible applicants can get loans of up to ₹20 lakh through participating banks and other financial institutions, subject to the scheme's eligibility conditions. Unlike the Weaver MUDRA Scheme, PMMY is not limited to the handloom sector.

How Does the Weaver MUDRA Scheme Work?

The Weaver MUDRA Scheme works through participating banks rather than providing loans directly to handloom weavers through the government. The bank sanctions the loan, while the government provides eligible financial assistance to reduce the beneficiary's borrowing burden. Here is how the process works:

• Application by the beneficiary: An individual handloom weaver, weaver entrepreneur, SHG, JLG or eligible handloom organisation approaches a participating bank with the prescribed loan application and supporting documents.
• Bank verification and loan approval: The bank checks the applicant's handloom-related eligibility, financial requirements and repayment capacity before deciding whether to sanction the loan.
• Loan disbursement: Once approved, the bank disburses the loan to the beneficiary according to the sanctioned terms and conditions.
• Submission of government assistance claims: After loan disbursement, the participating bank submits the applicable claims for margin money, interest subsidy and credit guarantee fee through the centralised Handloom Weaver MUDRA Portal.
• Transfer of margin money: The approved margin money assistance is transferred directly to the beneficiary's loan account, reducing the amount that the beneficiary needs to arrange independently.
• Interest subsidy and guarantee fee support: For eligible handloom organisations, the applicable interest subsidy and credit guarantee fee are provided to the concerned bank through the designated claim-processing system.

The Handloom Weaver MUDRA Portal has been developed in association with Punjab National Bank (PNB) to facilitate the submission and processing of financial assistance claims by participating banks. Individual weavers do not need to submit their loan applications directly through this claim portal.

Scheme Benefits

The Weaver MUDRA Scheme provides financial support to handloom weavers and organisations so they can manage their work, buy necessary materials and improve their handloom businesses. Under this scheme, eligible beneficiaries can get the following benefits:

• Individual handloom weavers and weaver entrepreneurs can receive margin money assistance of 20% of the loan amount, up to a maximum of ₹25,000.
• Eligible handloom organisations can receive margin money assistance of 20% of the loan amount, up to ₹20 lakh. The assistance is calculated at ₹2 lakh for every 100 weavers or workers, subject to the scheme conditions.
• Eligible handloom organisations can get loans at a concessional interest rate of 6% for three years.
• The government provides interest subsidy to eligible handloom organisations, up to the prescribed limit of 7%, to reduce their interest burden.
• The government also pays the applicable credit guarantee fee for eligible handloom organisation loans for up to three years.
• Weavers can use the loan to purchase yarn, dyes and other raw materials needed for their work.
• Loan assistance can also be used to pay wages and meet other production expenses.
• Weavers and eligible organisations can take loans to purchase new looms, tools, accessories and equipment or improve their existing facilities.
• The scheme makes bank credit available through participating commercial banks, Regional Rural Banks and cooperative banks, helping weavers reduce their dependence on private moneylenders and other costly sources of borrowing.
• The approved margin money assistance is deposited directly into the beneficiary's loan account, while applicable interest subsidy and credit guarantee fee support are provided to the concerned bank.
• Beneficiaries who have repaid their previous MUDRA loan may apply for another loan after one year of repayment, subject to the bank's approval.

Loan Amount and Repayment Period

The Weaver MUDRA Scheme provides bank loans to handloom weavers and eligible organisations according to their financial needs. Applicants can use these loans to manage day-to-day production expenses or purchase equipment required for their handloom work. The amount of the loan depends on the applicant's requirements and the participating bank's assessment.

Under the scheme, loans are divided into two categories based on the sanctioned amount:

The loan can be used for purchasing yarn, dyes and other raw materials, paying wages, meeting production expenses and buying looms, tools, accessories and equipment. This helps weavers continue their work without facing difficulties in arranging funds for regular business needs or improving their production facilities.

The scheme provides a loan period of three years. Eligible handloom organisations can also receive interest subsidy and credit guarantee fee support for up to three years from the date of the first loan disbursement.

The monthly instalments, repayment schedule and other loan conditions depend on the bank's lending terms and the applicant's loan agreement. Therefore, applicants should confirm these details with their bank before accepting the loan.

Note: The ₹10 lakh amount is only the classification limit between MUDRA loans and Concessional Credit. It is not the maximum loan amount under the overall Weaver MUDRA Scheme.

Eligibility Requirements

The Weaver MUDRA Scheme is available to individuals, groups and organisations involved in handloom weaving activities. Applicants must be engaged in the handloom sector and meet the applicable requirements of the scheme and participating bank to receive financial assistance.

The following individuals and organisations are eligible to apply for loans under the scheme:

• Individual handloom weavers who are actively involved in weaving activities.
• Weaver entrepreneurs engaged in handloom-related business activities.
• Self-Help Groups (SHGs) formed by handloom weavers.
• Joint Liability Groups (JLGs) engaged in handloom activities.
• Primary Handloom Weavers' Cooperative Societies working for the benefit of handloom weavers.
• Apex Handloom Weavers' Cooperative Societies.
• State Handloom Corporations involved in supporting the handloom sector.
• Special Purpose Vehicles (SPVs) and consortia promoted by handloom weavers in Mega Handloom Clusters and Handloom Parks.
• Handloom Producer Companies formed by weavers.

Applicants must also fulfil the following requirements:

• Individual applicants must provide proof of their handloom weaving activities through a Pehchan Card issued by the Office of the Development Commissioner (Handlooms), a Yarn Passbook or an identity card issued by the State Government.
• Handloom organisations must provide their registration certificate, balance sheet, profit and loss account and details of the weavers registered with the organisation.
• Applicants must approach a participating bank and satisfy its loan assessment, eligibility and repayment requirements.
• Any additional margin money required by the bank under its lending rules must be arranged by the beneficiary.
• An individual weaver who has already received margin money assistance cannot claim the same financial assistance again through an SHG, JLG or handloom organisation.
• Beneficiaries who have repaid their previous MUDRA loan may be considered for a fresh loan after one year of repayment, subject to the bank's approval.

Required Documents

Applicants need to submit certain documents to prove their identity and involvement in handloom activities when applying for a loan under the Weaver MUDRA Scheme. The required documents depend on whether the applicant is an individual weaver or a handloom organisation.

The following documents are required:

• Individual handloom weavers must submit a Pehchan Card issued by the Office of the Development Commissioner (Handlooms).
• Applicants can also provide a Yarn Passbook as proof of their involvement in handloom activities.
• An identity card issued by the respective State Government is also accepted.
• Handloom organisations must submit their registration certificate.
• Organisations need to provide their latest Balance Sheet and Profit and Loss Account.
• Handloom organisations must also submit the list or details of weavers registered with them.
• Applicants must complete the prescribed loan application form provided by the participating bank.

Applicants should keep copies of their required documents ready before visiting the bank. The participating bank may ask for additional documents, such as Aadhaar details, bank account information or other financial records, depending on its lending requirements and the applicant's category.

Steps to Apply

Handloom weavers and eligible organisations can apply for financial assistance under the Weaver MUDRA Scheme through participating banks. The application process is offline, as the bank is responsible for checking the applicant's eligibility, assessing the loan requirement and approving the loan. Follow these steps to apply:

• Get your handloom identity proof ready: Before applying, make sure you have a valid Pehchan Card issued by the Office of the Development Commissioner (Handlooms), a Yarn Passbook or an identity card issued by your State Government. These documents help the bank verify your involvement in handloom activities.
• Find a participating bank: Approach a Scheduled Commercial Bank, Regional Rural Bank, State Cooperative Bank or District Central Cooperative Bank that provides loans under the scheme. You can also seek guidance from your nearest Weavers' Service Centre (WSC) or State Handloom Department to identify a participating bank.
• Collect the application form: Ask the bank for the prescribed Weaver MUDRA Scheme loan application form. The application form is provided by the participating bank; a separate central online beneficiary registration form has not been specified in the scheme guidelines.
• Fill in the loan application: Enter your personal or organisational details, bank information and the amount of credit required. Clearly explain whether you need working capital for yarn, dyes and other production expenses or a term loan for purchasing looms, tools and equipment.
• Attach the required documents: Submit your handloom identity proof along with the completed application. Handloom organisations must also provide their registration certificate, balance sheet, profit and loss account and details of their registered weavers.
• Submit the application to the bank: Hand over the completed and signed application form with all supporting documents. The bank will examine your application, verify your eligibility and assess your repayment capacity before deciding whether to approve the loan.
• Receive the loan sanction letter: As per the revised NHDP guidelines, the participating bank should issue the loan sanction letter within one month from the application date. The final loan amount and other lending conditions depend on the bank's assessment.
• Receive the applicable scheme assistance: After the loan is sanctioned and disbursed, the participating bank submits the eligible claims through the centralised Handloom Weaver MUDRA Portal, developed in association with Punjab National Bank (PNB). The approved margin money assistance is credited directly to the beneficiary's loan account, while applicable interest subsidy and credit guarantee fee support are transferred to the concerned bank.

Difference Between Weaver MUDRA Scheme and PM MUDRA Yojana

The Weaver MUDRA Scheme and Pradhan Mantri MUDRA Yojana (PMMY) are related to institutional credit, but they serve different purposes. The Weaver MUDRA Scheme specifically supports the handloom sector under the National Handloom Development Programme, whereas PMMY provides loans to eligible micro-businesses operating in various sectors.

Here are the main differences between the two schemes:

Under the Pradhan Mantri MUDRA Yojana, loans are divided into four categories based on the amount required by the applicant:

The Tarun Plus category is available to entrepreneurs who have successfully repaid their previous Tarun-category loans. It was introduced with effect from 24 October 2024.

In simple terms, the Weaver MUDRA Scheme is specifically designed to address the credit requirements of India's handloom sector and provides additional government assistance that is not available in the same form under the general PM MUDRA Yojana. Eligible handloom weavers should therefore explore the Weaver MUDRA Scheme before choosing a general business loan.

Relevant Links

• Office of the Development Commissioner (Handlooms), Ministry of Textiles
• Weaver MUDRA Scheme Portal
• Revised NHDP Guidelines
• Development Commissioner (Handlooms) Contact Details
• JanSamarth Portal
• My Handlooms Portal

Contact Information

Office of the Development Commissioner (Handlooms) Ministry of Textiles, Government of India

• Phone: +91-11-23062945, +91-11-23063684
• Email: [email protected]
• Address: Room No. 56, Office of the Development Commissioner (Handlooms), Udyog Bhawan, New Delhi – 110011.

Scheme-related Contact Officers

• Shri M. K. Harikumar, Joint Development Commissioner – Phone: 011-23061865; Email: [email protected]
• Ms. Swayamprava Pani, Additional Development Commissioner – Phone: 011-23061643; Email: [email protected]

Bunkar Mitra – Handloom Helpline

• Phone: 1800-208-9988 (Toll-Free)
• Working Hours: 10:00 AM to 6:00 PM, all seven days of the week.