Context

The Union Cabinet announced PM SVANiDHI-Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi- a special Micro-Credit Facility Scheme for providing affordable loan to street vendors.

About

• PM SVANiDHI is a special micro-credit facility plan to provide affordable loan of up to ?10,000 to more than 50 lakh street vendors, who had their businesses operational on or before 24 March.
• The scheme is valid until March 2022.
• It was announced aims to enable street vendors to resume their livelihoods, which have been hit hard due to the national lockdown.
• Small Industries Development Bank of India is the technical partner for implementation of this scheme and will manage the credit guarantee to the lending institutions through Credit Guarantee Fund Trust for Micro and Small Enterprises.
• Under the scheme, vendors can avail working capital loan of up to ?10,000, which is repayable in monthly instalments within one year.
• 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 (DBT) on six-months basis.
• There will be no penalty on early repayment of loan.

Applicability of the Scheme

• The scheme is applicable to vendors, hawkers, thelewalas, rehriwalas, theliphadwalas in different areas/contexts who supply goods and services.
• Street vendors belonging to the surrounding peri-urban/rural areas are also included.

The need

• Street vendors usually work with a small capital base taken on very high interest rates (sometimes as high as 1% per day- amounting to nearly 400% per annum) from informal sources.
• Further, they might have consumed their savings and high cost capital during the lockdown.
• Therefore, there is an urgent need to provide affordable credit for working capital through formal banking channel to street vendors to help them resume the business.
• A timely repayment will ensure that the vendor gets a credible credit score and are eligible for a higher loan.