Over 1 lakh street vendors get loan under PM SVANidhi

The government has received over five lakh applications under the ‘PM  SVANidhi’ scheme which aims to provide street vendors loan up to Rs 10,000 to restart their business post the COVID-19 lockdown.

The number of loans sanctioned under the scheme have crossed one lakh within 41 days of commencement of the lending process.

The PM SVANidhi scheme was launched by the Ministry of Housing & Urban Affairs under the ambit of ‘Atmanirbhar Bharat Abhiyan’.

Significance of the scheme

Street vendors represent a very important constituent of the urban informal economy and play a significant role in ensuring availability of the goods and services at affordable rates at the doorsteps of the city dwellers. 

The COVID-19 pandemic and consequent lockdowns have adversely impacted the livelihoods of street vendors. They usually work with a small capital base and might have consumed the same during the lockdown. Therefore, there is an urgent need to provide credit for working capital to street vendors to resume their business.

The scheme will open up new opportunities to this sector to move up the economic ladder.

Highlights of the scheme

• It aims at facilitating collateral free working capital loan up to Rs 10,000 of one year tenure, to about 50 lakh street vendors in the urban areas, including those from the surrounding peri-urban/ rural areas. 

• Available for beneficiaries belonging to only those states/UTs which have notified rules and scheme under Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014. 

• Incentives in the form of interest subsidy at the rate of 7 per cent per annum on regular repayment of loan, cashback upto Rs 1,200 per annum on undertaking prescribed digital transactions.

• On timely or early repayment, the vendors will be eligible for the next cycle of working capital loan with an enhanced limit.

• It envisages bringing ‘banks at the door steps’ of these ‘nano-entrepreneurs’ by engaging the Non-Banking Financial Companies (NBFCs) and the Micro-Finance Institutions (MFIs) as lending institutions in addition to scheduled commercial banks - public and private, regional rural banks, cooperative banks, SHG banks etc.

• Onboarding of the vendors on digital payment platforms is a very important component to build the credit profile of the vendors to help them become part of the formal urban economy.

• Small Industries Development Bank of India (SIDBI) is the implementation partner for the scheme. 

• A graded guarantee cover is provided on portfolio basis to these lending institutions through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to encourage lending to street vendors.

• Street vendors mostly operate their businesses on very thin margins and such micro-credit support will provide them major relief.

• Use of an integrated IT platform (pmsvanidhi.mohua.org.in), web portal and mobile app, has enabled the scheme to extend its reach and benefits to this segment of society with the objective of minimum government and maximum governance.