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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.
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.
The PM-SVANidhi- Micro Credit Scheme launched by the Ministry of Housing and Urban Affairs provides a number of facilities which are highlighted below.
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 24th March 2020 are eligible under this scheme. Further, the scheme shall be valid until March 2022.
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.
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.
This scheme promotes digital transactions by the street vendors through cashback incentives of up to one hundred rupees per month.
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.
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.
To avail the loan, a vendor should furnish the following:
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.
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.
In this segment, we have summarised the benefits under this scheme. These are as follows:
Also, read: Difference between Microcredit and Microfinance