PM-SVANidhi- Micro Credit Scheme for Street Vendors

Ashish M. Shaji

29 Jul, 2020

The Union government has launched PM-SVANidhi- Pradhan Mantri Street Vendor’s Atmanirbhar Nidhi, which is a micro credit scheme for providing affordable loans to street vendors. The scheme is intended to enable the street vendors to resume their livelihoods that have been adversely affected by the Covid-19 pandemic and the subsequent lockdown.

Who is the beneficiary under this scheme?

The scheme is expected to benefit the likes of vendors, hawkers, and people involved in the goods and services in different areas. The scheme targets 50 lakh street vendors.

What are the key highlights of this scheme?

The PM-SVANidhi- Micro Credit Scheme launched by the Ministry of Housing and Urban Affairs provides a number of facilities which are highlighted below.

• Loan facility

Under this scheme, the vendors can avail of a working capital loan of up to 10000 Rs, which shall be payable in monthly installments within a year. The loan will be collateral-free. The Micro-Finance Institutions (MFIs), Non-Banking Finance Companies (NBFCs), Self Help Groups have been allowed in the scheme for the urban poor as their presence is on the ground level and considering the proximity to the urban poor including to the street vendors.

It may be noted that there is no penalty in case where the loan is repaid early. Repaying the loan early means clearance of debt or loan before the scheduled time. There are a few banks and lenders that levy penalties on early repayment of loan.

Those vendors that were vending till 24^th March 2020 are eligible under this scheme. Further, the scheme shall be valid until March 2022. 

• Interest Subsidy of 7% per annum

Where the loan is repaid early or on time, an interest subsidy of 7% per annum shall be credited to the beneficiaries’ bank accounts through direct transfers on a quarterly basis.

• Escalation of credit limits

The scheme provides for the escalation of credit limits when the loan is repaid early or on time. It provides an opportunity for the vendors to go up on the economic ladder by availing of this facility.

• Promotion of digital transactions

This scheme promotes digital transactions by the street vendors through cashback incentives of up to one hundred rupees per month.

• Capacity building and financial literacy program

The Ministry of Housing and Urban Affairs, in collaboration with the state government, will launch programs like capacity building and financial literacy program of all stakeholders and IEC (Information, Education, and Communication) activities in the country during June.

• E-governance

With a view to leverage technology to ensure effective delivery and transparency, a digital platform is being developed to administer the scheme with end to end solution.  The digital platform will integrate with the UdyamMitra portal of SIDBI (Small Industries Development Bank of India) for credit management, and it will help in integrating the vendors into the formal financial system. 

What are the documents required by the vendors for availing the loan under this Micro Credit Scheme?

To avail the loan, a vendor should furnish the following:

• Certificate of vending or ID card issued by the Urban local bodies;
• Where a vendor is left out of the survey of street vendors, then he or she must produce one of the following documents:
• Details showing past loan taken from a bank or any other financial institution for vending.
• Membership details.
• Any other valid document that proves he or she is an applicant.
• KYC documents like Aadhaar Card, Voter ID card, Driving License, MNREGA Card, or PAN Card is needed.

Who is the implementation agency for this scheme?

A Memorandum of Understanding has been signed between the Ministry of Housing and Urban Affairs and the Small Industries Development Bank of India with a view to engaging SIDBI as the implementation agency for this micro-credit scheme.

What is the role of Urban Local Bodies?

The Urban Local Bodies will play a critical role in the implementation of the scheme by targeting the beneficiaries and by reaching them in an efficient manner.

What are the benefits under the PM-SVANidhi- Micro Credit Scheme?

In this segment, we have summarised the benefits under this scheme. These are as follows:

• As stated earlier, the scheme provides a working capital loan of up to 10000 Rs. to the vendors, which shall be repayable in monthly installments in one year’s tenure. It is one of the key benefits of this scheme.
• The interest subsidy of 7% per annum on timely payment or early repayment of loan is another benefit that will help the beneficiaries. This benefit will be credited to their bank accounts through direct benefit transfer.
• The fact that no penalty will be levied on early repayment of loan will encourage more vendors to repay the loan early.
• Another benefit under this scheme is the cashback incentives of up to one hundred rupees per month on digital transactions by the street vendors.
• The scheme provides for the rise in credit limit in case of timely or early repayment of loans that means if a street vendor repays the loan amount on time or earlier, they can raise their credit, which makes them eligible for a higher amount of loan.
• The provision of loans through this scheme will help vendors in restarting their work, especially those who have been hit hard by the Covid-19 pandemic and the subsequent lockdown.

Conclusion

Also, read: Difference between Microcredit and Microfinance