Over 20 lakh street vendors line up for PM loan scheme


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In News:

  • Over 20 lakh street vendors have applied for interest-free loans of Rs 10,000 each as working capital under the Prime Minister Street Vendor’s Atmanirbhar Nidhi (PM SVANidhi).

News Summary:

  • The street vendors availing loans include nearly 10 lakh sellers of fruits and vegetables, and over 4 lakh selling snacks and fast food like chaat and gol gappa.
  • Sellers of flowers and puja items, beauty products, shoes, kitchen items and electronics goods, such as mobile phones and chargers, are also on the list of applicants, apart from those providing services like cobblers.
  • However, only 2 lakh applicants have received the money so far, with officials and applicants pointing to a number of hurdles that are slowing the process.
  • Implementation Issues
    • There is still a lot of resistance in banks and municipal bodies and some implementation issues include-
    • Several banks are seeking applications on stamp papers worth between Rs 100 and Rs 500.
    • There have also been instances of banks seeking PAN cards and even checking the CIBIL score of applicants.
    • State authorities are asking for voter ID cards, which many migrant vendors don’t carry with them.
    • There have also been complaints of harassment by police and municipal officials.
    • But on a policy level, this is a useful scheme because it gives much-needed working capital.
  • Steps Taken by the Government to Streamline the Process
    • Following feedback from vendors, Minister of Housing and Urban Affairs told the states to see to it that street vendors are not harassed by the authorities as all they are asking is a right to livelihood.
    • The Centre has also decided to send the applications directly to bank branches listed by the applicant as “preferred lender” or where the vendor holds a savings bank account.
    • Officials said a software has been developed that can “push” around 3 lakh applications to the banks.

About: Prime Minister Street Vendors Atma-Nirbhar Nidhi Scheme (PM SVANidhi)

  • Background
    • 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 door-step 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.
  • Objective
    • Its objective is to provide affordable working capital loan to street vendors to resume their livelihoods that have been adversely affected due to Covid-19 lockdown.
    • It aims to empower Street Vendors by not only extending loans to them, but also for their holistic development and economic upliftment.
    • The street vendors can achieve their ambition of going up the economic ladder by availing the facility of enhancement of the credit limit on timely/ early repayment of loan.
  • Features
    • PM SVANidhi was launched by the Ministry of Housing and Urban Affairs on June 01, 2020 and has a sanctioned budget of Rs 700 crore.
    • The scheme intends to facilitate collateral free working capital loans of up to INR10,000/- of one-year tenure, to approximately 50 lakh street vendors, to help resume their businesses in the urban areas, including surrounding peri-urban/rural areas.
  • Intended Beneficiaries
    • This scheme targets to benefit over 50 lakh Street Vendors who had been vending on or before 24 March, 2020, in urban areas including those from surrounding peri-urban/rural areas.
  • Benefits
    • Under the Scheme, the vendors can avail a working capital loan of up to Rs. 10,000, which is repayable in monthly instalments in the tenure of one year.
    • The loan needs to be repaid within a year under the scheme.
    • On timely/ early repayment of the loan, an interest subsidy @ 7% per annum will be credited to the bank accounts of beneficiaries through Direct Benefit Transfer on quarterly basis.
    • There will be no penalty on early repayment of loan and upon repayment, a vendor is eligible for another Rs 10,000 as loan.
    • The scheme promotes digital transactions through cash-back incentives up to an amount of Rs. 100 per month.
  • Implementing Agency
    • Small Industries Development Bank of India (SIDBI) is the Implementation Agency for PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi).
    • SIDBI will implement the PM SVANidhi Scheme under the guidance of MoHUA.
    • It will also manage the credit guarantee to the lending institutions through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
    • It will develop and maintain a customized and integrated IT Platform providing end-to-end solutions, including documentation of all the processes and workflows for an end-to-end solution, through a Portal and a Mobile App, to ensure engagement and information flow between Urban Local Bodies (ULBs), Lending Institutions, Digital Payment Aggregators and other stakeholders.

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