A letter purporting to grant a loan of ₹7,00,000 under the Pradhan Mantri Mudra Yojana on payment of ₹860 as agreement charges is fake, the Press Information Bureau’s fact-checking unit has confirmed. If you or someone you know has received this letter, do not pay the money. It is a fraud.
What the Fake Letter Claims
The fabricated letter presents itself as an official approval under PM Mudra Yojana, informing the recipient that a loan of ₹7 lakh has been sanctioned in their name. It asks the recipient to pay ₹860 as agreement or processing charges to release the loan amount. The letter uses official-sounding language and formatting designed to appear legitimate.
This is a classic advance-fee fraud — the payment of ₹860 is the scam’s actual objective. No loan will follow. The money paid will be lost, and in many cases fraudsters use the initial payment to extract further amounts under various pretexts before disappearing entirely.
Why This Letter Cannot Be Real — How Mudra Actually Works
PIB’s fact check identifies the core reason this letter is fraudulent: MUDRA does not lend directly to individuals or micro-entrepreneurs. This is the most important fact to understand about how the scheme actually functions.
MUDRA — Micro Units Development and Refinance Agency — is a refinancing institution, not a direct lender. It provides funds to what are called Last Mile Financiers — the institutions that actually extend credit to small businesses and micro-entrepreneurs on the ground. These Last Mile Financiers include non-banking financial companies, microfinance institutions, societies, trusts, Section 8 companies, small finance banks and regional rural banks.
The process works like this: a small business owner or micro-entrepreneur approaches a bank, NBFC or MFI to apply for a Mudra loan. That lending institution evaluates the application, sanctions the loan if eligible, and disburses the funds directly to the borrower. MUDRA then refinances the lending institution — meaning it provides funds to the bank or NBFC to replenish their lending capacity. The borrower never interacts with MUDRA directly. MUDRA never sends loan approval letters to individuals. MUDRA never asks individuals to pay any charges of any kind.
Any letter, message, call or email claiming to be from MUDRA and offering a direct loan to an individual is fraudulent by definition, because direct lending to individuals is not something MUDRA does or is legally authorised to do.
The Three Mudra Loan Categories
For readers who want to understand the legitimate Mudra scheme, loans under PM Mudra Yojana are available in three categories through authorised banks and financial institutions. Shishu covers loans up to ₹50,000 for the earliest stage businesses. Kishore covers loans from ₹50,001 to ₹5 lakh for businesses in a growth phase. Tarun covers loans from ₹5 lakh to ₹10 lakh for more established micro and small enterprises. All applications must be made directly to a bank, NBFC, MFI or other authorised lending institution — never through a letter, a link, or a phone call offering advance approval in exchange for fees.
How to Apply for a Real Mudra Loan
If you are a micro or small business owner legitimately seeking a Mudra loan, approach any scheduled commercial bank, regional rural bank, small finance bank, microfinance institution or NBFC directly. The application involves standard KYC documentation, a business plan or description of the enterprise, and assessment by the lending institution. No advance payment of any kind is required at any stage of a legitimate Mudra loan application.
What to Do If You Received This Letter
Do not pay the ₹860 or any other amount demanded. Do not share your bank account details, Aadhaar number, PAN card or any other personal information with whoever sent this letter. Report the fraud to the National Cyber Crime Reporting Portal at cybercrime.gov.in or call the helpline number 1930. You can also report it to your nearest police station under the relevant cybercrime provisions.
If you have already paid money in response to this letter, report it immediately to your bank and to the cybercrime portal — early reporting improves the chances of transaction reversal in some cases.
This article is based on a PIB Fact Check. Government schemes can be verified at pib.gov.in or by calling the PIB Fact Check helpline.