What is PM SVANidhi Scheme?
The government established the PM Street Vendor’s AtmaNirbhar Nidhi (PM Svanidhi) initiative in June 2020 to give financing for working capital to street vendors. Under this program, street vendors can get collateral-free loans with low-interest rates for a period of one year.
The lockdowns caused by the COVID-19 pandemic affected everyone’s livelihoods, particularly those of street vendors. They typically have a moderate capital basis and their savings and capital base would have been consumed during the lockdown. Street vendors play an essential role in the city’s informal economy by ensuring that city people have access to services and goods at reasonable prices. As a result, there was an immediate need to supply them with loans for working capital so that they could restart their business.
PM SVANidhi Scheme Objectives:
1. Working Capital Loans
Urban street vendors can apply for a Working Capital (WC) loan of up to Rs.10,000 for a one-year term of the loan in monthly installments. This loan does not require any collateral. The street sellers will be eligible for the next cycle of the WC loan with a higher limit if they return this loan early or on schedule. There is no prepayment penalty if you return your WC loan before the specified date.
2. Rate of Interest:
Scheduled Commercial Banks, Small Finance Banks (SFBs), Regional Rural Banks (RRBs), Cooperative Banks, and SHG (self-help groups) Banks will charge the prevalent rate of interest. The interest rates for Non-Banking Financial Companies (NBFCs), Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs), and other lender categories will be set by the RBI. In the case of non-NBFC MFIs and other lender types not covered by the RBI rules, interest rates would be applicable to the extent of the RBI guidelines for NBFC-MFIs.
3. Interest Subsidy:
Street vendors who take out WC loans under the plan are eligible for a 7% interest subsidy. On a quarterly basis, the interest subsidy is credited to the borrower’s account. The interest subsidy will be in effect until March 31, 2022. Up to that point, the interest subsidy is provided on the first and subsequently increased loans.
4. Promotion of Digital Transactions by Street Vendors:
Through the cash-back provision, this initiative provides an incentive for street vendors to adopt digital transactions. The network of lending institutions and digital payment aggregators like Paytm, NPCI (for BHIM), GooglePay, AmazonPay, BharatPay, PhonePe, and others would help in onboarding vendors for digital transactions. Onboarded vendors would be compensated with a monthly cashback ranging from Rs.50 to Rs.100.
Features of PM SVANidhi Scheme:
- It is a central government-backed initiative, which means it is directly funded by the central ministries.
- Street sellers can avail of the use of this until March 2022.
- They can initially receive collateral-free loans and working capital of up to $10,000.
- In previous transactions, early or timely repayment might result in interest subsidies and a larger loan amount.
- Because of digital purchases, street merchants can now receive cash back incentives.
Achievements of the PM SVANidhi Scheme:
- Interest subsidy in the amount of Rs 51 crore has been paid. Under PM SVANidhi, significant achievements has already been accomplished.
- According to the announcement, as of April 25, 31.9 lakh loans had been sanctioned and 29.6 lakh loans of Rs 2,931 crore had been disbursed.
Eligibility Criteria of PM SVANidhi Scheme:
Over 50 lakh street vendors are expected to benefit from this initiative. To obtain the loan, a vendor must
- Have a Certificate of Vending / Identity Card issued by an Urban Local Body (ULB)
- The sellers that were identified in the street vendor survey but were not received a Certificate of Vending/ Identity Card
- If a vendor is excluded from the survey, he or she must present one of the following papers in order to acquire a Letter of Recommendation (LoR) from Urban Local Bodies/TVC:
- Documents proving a previous loan taken from a bank/NBFC/MFI for the purpose of selling
- Membership information, if a member of a street seller’s association such as NASVI, NHF, SEWA
- Any other documentation confirming that s/he is a vendor
- The seller can also request that ULB perform a local inquiry to validate the validity of their claim for receipt of LoR by a simple application on white paper.
- Aadhaar Card/ Voter’s Identity Card/ Driving License/ MNREGA Card/ PAN Card is required as KYC documents.
Challenges of the PM SVANidhi Scheme:
Even while the initiative has received a great response from suppliers around the country, certain places lag behind others in terms of implementation due to a variety of issues. The Street Sellers Act of 2014, which requires a survey of vendors in order to provide them with a certificate of vending, has been applied unevenly across the country.
- The lack of a vending certificate is one of the key issues seen in Delhi, which has a history of unfair evictions of vendors and has failed to conduct a city-wide survey of vendors as per the norms issued by the Delhi government in 2016. As a result, vendors must first ask for a Letter of Recommendation (LORs) from the ULBs, which not only delays the entire process but can also result in the application being denied.
- A second issue was that certain vendors’ mobile numbers were not linked to their Aadhaar cards. To solve this, some ULBs have created camps. Many vendor organizations are also creating camps at markets to resolve this issue and help vendors with the online application procedure.
Related Frequently Asked Questions and Answers:
Q1. What is the PM SVANidhi Scheme?
Ans: The government established the PM Street Vendor’s AtmaNirbhar Nidhi (PM Svanidhi) initiative in June 2020. It was established to give financing for working capital to street vendors. Under this program, street vendors can get collateral-free loans with low-interest rates for a period of one year.
Q2. What are the Objectives of the PM SVANidhi Scheme?
Ans:
1. Working Capital Loans: Urban street vendors can apply for a Working Capital (WC) loan of up to Rs.10,000 for a one-year term of the loan in monthly installments. This loan does not require any collateral. The street sellers will be eligible for the next cycle of the WC loan with a higher limit if they return this loan early or on schedule. There is no prepayment penalty if you return your WC loan before the specified date.
2. Rate of Interest: Scheduled Commercial Banks, Small Finance Banks (SFBs), Regional Rural Banks (RRBs), Cooperative Banks, and SHG (self-help groups) Banks will charge the prevalent rate of interest. The interest rates for Non-Banking Financial Companies (NBFCs), Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs), and other lender categories will be set by the RBI. In the case of non-NBFC MFIs and other lender types not covered by the RBI rules, interest rates would be applicable to the extent of the RBI guidelines for NBFC-MFIs.
3. Interest Subsidy: Street vendors who take out WC loans under the plan are eligible for a 7% interest subsidy. On a quarterly basis, the interest subsidy is credited to the borrower’s account. The interest subsidy will be in effect until March 31, 2022. Up to that point, the interest subsidy is provided on the first and subsequently increased loans.
4. Promotion of Digital Transactions by Street vendors: Through the cash-back provision, this initiative provides an incentive for street vendors to adopt digital transactions. The network of lending institutions and digital payment aggregators like Paytm, NPCI (for BHIM), GooglePay, AmazonPay, BharatPay, PhonePe, and others would help in onboarding vendors for digital transactions. Onboarded vendors would be compensated with a monthly cashback ranging from Rs.50 to Rs.100.
Q3. Discuss the Features of the PM SVANidhi Scheme.
Ans:
- It is a central government-backed initiative, which means it is directly funded by the central ministries.
- Street sellers can avail of the use of this until March 2022.
- They can initially receive collateral-free loans and working capital of up to $10,000.
- In previous transactions, early or timely repayment might result in interest subsidies and a larger loan amount.
- Because of digital purchases, street merchants can now receive cash back incentives.
Q4. Discuss the Achievements of the PM SVANidhi Scheme.
Ans:
- Interest subsidy in the amount of Rs 51 crore has been paid. Under PM SVANidhi, significant achievements has already been accomplished.
- According to the announcement, as of April 25, 31.9 lakh loans had been sanctioned and 29.6 lakh loans of Rs 2,931 crore had been disbursed.