Find the cheapest Mudra loan rate in India
Compare 9 banks side by side, then plug the rate into the calculator to see your real EMI and total interest. Even 0.5% saves tens of thousands.
Bank-by-bank, starting rate compared
Indicative starting rates for FY 2025–26. The cheapest is highlighted. Always ask for the Annual Percentage Rate (APR) which includes all fees.
- SBI8.50%8.5% – 10% · Nil for Shishu; 0.5% else · Public
- PNB8.50%8.5% – 11% · Nil for Shishu; 0.5% else · Public
- BOB9.00%9% – 10.5% · Nil for Shishu; up to 0.5% · Public
- Canara8.75%8.75% – 10.5% · Nil for Shishu; 0.5% else · Public
- Union8.75%8.75% – 11% · Nil for Shishu; 0.5% else · Public
- HDFC10.00%10% – 12% · 0.5% – 1% · Private
- ICICI10.00%10% – 11.5% · 0.5% – 1% · Private
- Axis10.50%10.5% – 12% · 0.5% – 1% · Private
- Kotak10.50%10.5% – 12.25% · 0.5% – 1% · Private
| Bank | Rate range | Processing fee | Type |
|---|---|---|---|
| State Bank of IndiaLowest | 8.5% – 10% | Nil for Shishu; 0.5% else | Public |
| Punjab National Bank | 8.5% – 11% | Nil for Shishu; 0.5% else | Public |
| Bank of Baroda | 9% – 10.5% | Nil for Shishu; up to 0.5% | Public |
| Canara Bank | 8.75% – 10.5% | Nil for Shishu; 0.5% else | Public |
| Union Bank of India | 8.75% – 11% | Nil for Shishu; 0.5% else | Public |
| HDFC Bank | 10% – 12% | 0.5% – 1% | Private |
| ICICI Bank | 10% – 11.5% | 0.5% – 1% | Private |
| Axis Bank | 10.5% – 12% | 0.5% – 1% | Private |
| Kotak Mahindra | 10.5% – 12.25% | 0.5% – 1% | Private |
Indicative rates for FY 2025–26 — confirm with your bank before applying.
Plug in the rate. See the cost.
Punch in the rate quoted by your shortlisted bank. Even a 0.5% delta compounds into meaningful savings over the tenure.
Calculate Your EMI
KishoreMonthly EMI
₹3,226.72
Six factors banks actually weigh
CIBIL score
750+ unlocks the lower end of the bank's range. Below 650 expects upper bound or rejection.
Loan category
Shishu (up to ₹50K) often gets preferential rates due to govt refinance. Tarun Plus is priced slightly higher.
Business vintage
2+ years of ITR filings = lower-risk borrower in the bank's eyes. New ventures pay a premium.
Banking relationship
A 12+ month savings/current account history with the lender can unlock pre-approved offers.
Rate benchmark
RLLR-linked tracks repo rate; MCLR resets slower; fixed stays put but starts higher.
Collateral
Mudra loans are unsecured by policy, but voluntary collateral can sometimes negotiate the rate down.
Six moves to land the lowest rate
Apply to 2–3 banks in parallel — compare sanction letters, ask each to match the best offer.
Improve CIBIL before applying — clear card balances, avoid multiple loan applications in the prior 3 months.
Start with a public sector bank — SBI, Canara, BOB, PNB consistently quote lower PMMY rates.
Choose RLLR during falling repo cycles — RBI cuts pass through to you every 3–6 months.
Use your existing bank relationship — they have your KYC and transaction history already.
Submit a strong project report — CMA data + realistic projections signal lower risk in negotiation.
Rate-related questions
Which bank offers the lowest Mudra loan interest rate in 2026?
In 2026, public sector banks generally offer the lowest Mudra loan interest rates. State Bank of India (SBI), Canara Bank, and Bank of Baroda typically quote rates between 8.5% and 10% per annum, while Punjab National Bank (PNB) and Union Bank hover between 8.75% and 11%. Private banks like HDFC, ICICI, Axis and Kotak usually charge 10% to 12%. Final rates depend on your CIBIL score, business vintage, and loan category.
Is the Mudra loan interest rate fixed by the government or RBI?
No. Mudra loan interest rates are not fixed by RBI or the government. Under PMMY, each scheduled bank sets its own rate based on its cost of funds, repo rate linkage, risk weighting, and borrower profile. This is why you see a range (for example 8.5% to 12%) rather than a single rate. Always compare 2–3 banks before applying.
How can I negotiate a lower Mudra loan interest rate?
You can often negotiate 0.25% to 1% off the quoted rate by: (1) maintaining a CIBIL score of 750 or higher, (2) showing 2+ years of ITR filings and clean business vintage, (3) leveraging an existing savings or current account relationship with the bank, (4) getting competing offers from 2–3 banks and asking each to match the lowest, and (5) opting for a repo-linked floating rate rather than a fixed rate during low-rate cycles.
Does the Mudra loan category affect the interest rate?
The category (Shishu, Kishore, Tarun, Tarun Plus) primarily determines the loan amount range, not the rate directly. However, Shishu loans (up to Rs 50,000) often get the most favourable rates because they are backed by government refinance schemes and have zero processing fees. Larger Tarun and Tarun Plus loans may be priced slightly higher because the bank’s own credit risk exposure is larger.
What is the difference between fixed and floating Mudra loan rates?
A fixed-rate Mudra loan keeps the same interest rate for the entire tenure — your EMI never changes. A floating-rate Mudra loan is usually linked to the bank’s Repo Linked Lending Rate (RLLR) or Marginal Cost of Funds Lending Rate (MCLR) and adjusts every 3 or 6 months as those benchmarks move. Floating rates are cheaper when repo rates are falling; fixed rates offer predictability when rates are rising.
Are there hidden charges besides the Mudra loan interest rate?
Yes, beyond the stated interest rate you may pay: (1) processing fee of 0.5% to 1% for Kishore and Tarun loans (Shishu loans have zero processing fees), (2) documentation or legal charges of Rs 500 to Rs 2,000, (3) stamp duty as per state law, (4) CIBIL report fee, and (5) insurance premium if the bank mandates loan protection insurance. Always ask for the Annual Percentage Rate (APR) which includes all these costs, not just the headline interest rate.
Can the Mudra loan interest rate be revised during the loan tenure?
For fixed-rate Mudra loans, the rate cannot be revised during the tenure unless you refinance. For floating-rate loans linked to RLLR or MCLR, the rate is automatically reviewed every 3 or 6 months (as per your loan agreement) and your EMI may change accordingly. RBI guidelines require banks to notify you in writing whenever the applicable rate changes.
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