The PM SVANidhi (Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi) scheme, launched by the Ministry of Housing and Urban Affairs on June 01, 2020, has emerged as a lifeline for street vendors whose livelihoods were severely impacted by the Covid-19 lockdown. The scheme aims to provide affordable working capital loans to these vendors, enabling them to resume their businesses and rebuild their lives. With a collateral-free loan of Rs 10,000 and low-interest rates, the PM SVANidhi scheme has become a crucial support system for street vendors across the country.
Supporting Street Vendors through Working Capital Loans
One of the primary objectives of the PM SVANidhi scheme is to provide working capital loans to street vendors. These vendors, who operate in the informal sector, often face challenges in accessing credit from formal financial institutions. The scheme bridges this gap by offering a collateral-free loan of Rs 10,000 for a period of one year. This financial assistance helps them restock their inventory, repair their carts, and invest in their businesses, thus ensuring a smooth restart.
Affordable Interest Rates and Extended Duration
The PM SVANidhi scheme has been designed to be highly accessible for street vendors. The interest rates on these loans are kept below 12%, ensuring that the burden of repayment remains manageable. Additionally, the duration of the scheme was initially set until March 2022. However, considering the ongoing impact of the pandemic and the need for sustained support, the scheme has been extended till December 2024. This extension allows more street vendors to avail of the benefits and recover from the long-lasting effects of the lockdown.
Eligibility Criteria for Street Vendors
To avail of the loan under the PM SVANidhi scheme, street vendors must meet specific eligibility criteria. Vendors who have been vending on or before March 24, 2020, and possess a valid certificate of vending issued by the Town Vending Committees are eligible for the loan. The certificate of vending is issued after conducting a survey of all the vendors in an area, as per the Street Vendors Act 2014. This ensures that the assistance reaches genuine street vendors and fosters a transparent and accountable process.
Incentives for Timely Repayment
Encouraging timely repayment is crucial for the sustainability of the PM SVANidhi scheme. The scheme offers an attractive interest subsidy of 7% per annum to beneficiaries who repay their loans on time or ahead of schedule. This acts as a strong incentive for vendors to stay disciplined in their loan repayments and helps them build a positive credit history. Moreover, there are no penalties imposed on early loan repayment, further easing the burden on the vendors.
Promoting Digital Transactions and Cash Back Incentives
The PM SVANidhi scheme aims to promote digital transactions among street vendors, aligning with the broader push towards a cashless economy. To achieve this, the scheme offers cashback incentives of up to Rs. 100 per month to vendors who adopt digital payment methods. This not only helps vendors save on transaction costs but also enhances financial inclusion and brings them into the formal banking system.
Escalation of Credit Limit
As vendors continue to repay their loans responsibly, the PM SVANidhi scheme rewards them with an escalation of the credit limit. By demonstrating creditworthiness and financial discipline, vendors can access higher loan amounts for expanding their businesses. This feature incentivizes vendors to grow their enterprises and seize new opportunities, ensuring a sustained upliftment of their socio-economic status.
