DR Ambedkar IAS Academy

PM SVANidhi: Micro Credit Scheme for Street Vendors

PM SVANidhi: Micro Credit Scheme for Street Vendors

  • The Ministry of Housing and Urban Affairs (MoHUA) has launched Pradhan Mantri Street Vendor’s Atma Nirbhar Nidhi (PM SVANidhi), for providing affordable loans to street vendors.
  • Earlier, the Scheme was announced as a part of the Economic Stimulus-II under the Atmanirbhar Bharat Abhiyan.
  • The scheme would benefit vendors, hawkers, thelewale and people involved in goods and services related to textiles, apparel, artisan products, barbers shops, laundry services etc. in different areas.

Key Points

  • Loan facility:
    • The vendors can avail a working capital loan of up to Rs. 10,000, which is repayable in monthly instalments within a year. The loans would be without collateral.
      • It is for the first time that Microfinance InstitutionsNon-Banking Financial CompanySelf Help Groups have been allowed in a scheme for the urban poor due to their ground-level presence and proximity to the urban poor including the street vendors.
    • There will be no penalty on early repayment of the loan.
      • Early repayment (or resettlement) is a clearance of debt or loan before the scheduled time. Many banks and lenders charge penalties for repaying loans early.
    • Those who were vending till 24th March 2020 can avail the benefits of the scheme.
      • This is for the first time that street vendors from peri-urban/rural areas have become beneficiaries of an urban livelihood programme.
    • The scheme is valid until March 2022.
  • Interest Subsidy:
    • On timely/early repayment of the loan, an interest subsidy of 7% per annum will be credited to the bank accounts of beneficiaries through direct benefit transfer on a six-monthly basis.
  • Escalation of credit limits:
    • The scheme provides for the rise of the credit limit on timely/ early repayment of loans i.e. if a street vendor repays the instalments on time or earlier, he or she can develop his or her credit score that makes him/her eligible for a higher amount of term loan such as Rs. 20,000.
  • Encourage digital transactions:
    • The scheme incentivises digital transactions by the street vendors through monthly cashback.
  • Focus on capacity building:
    • MoHUA in collaboration with State Governments will launch a capacity building and financial literacy programme of all the stakeholders and Information, Education and Communication (IEC) activities throughout the country during the month of June and loaning will commence in the month of July.
  • Role of Urban Local Bodies (ULBs):
    • ULBs will play a pivotal role in the implementation of the scheme by ensuring to target the beneficiary and reaching to them in an efficient manner.
  • E-governance:
    • In line with the vision of leveraging technology to ensure effective delivery and transparency, a digital platform with a web portal/ mobile app is being developed to administer the scheme with an end-to-end solution.
    • This platform will integrate the web portal/ mobile app with UdyamiMitra portal of SIDBI for credit management and PAiSA portal of MoHUA to administer interest subsidy automatically.
    • It will help in integrating the vendors into the formal financial system.

Way Forward

  • The loans through the scheme would help to kick-start activity for vendors who have been left without any income due to the impact of Covid-19 and lockdown.
  • Despite multiple schemes running for the street vendors, there are various gaps in implementation, identification, awareness and accessibility of various schemes which should be plugged in a timely manner.
  • Benefits like maternity allowances, accident relief, natural death compensation, education support for children for higher studies, pension during any crisis should be provided to them.

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