The Pradhan Mantri Street Vendor’s Atmanirbhar Nidhi Scheme (PM SVANidhi) is a government initiative aimed at supporting street vendors whose businesses have been adversely impacted by the COVID-19 pandemic. This scheme is an effort to provide financial assistance to this vulnerable segment of society, ensuring they can continue their livelihoods and contribute to the economy.
Overview of PM SVANidhi Scheme
Launched in June of the previous year by the Ministry of Housing and Urban Affairs, the PM SVANidhi Scheme offers a micro-credit facility to street vendors across the country. The primary objective of the scheme is to enable these vendors to resume their business activities, which were disrupted due to the pandemic. The financial aid provided under this scheme comes in the form of collateral-free loans of up to Rs.10,000, which the beneficiaries can repay over a period of one year.
Loan Uptake from Private Banks
Despite the scheme’s intentions, there has been a noticeable trend in the source of these loans. Ten months after the launch of PM SVANidhi, data revealed that only 1.6% of the total loans under this scheme were disbursed by private banks. This low percentage points to a significant reliance on public sector banks and other financial institutions for the implementation of the scheme.
Challenges Faced by Private Banks
One major challenge that has been identified is the apprehension among private banks concerning a potential increase in Non-Performing Assets (NPAs). NPAs are loans or advances for which the principal or interest payment remained overdue for a period of 90 days. Given that street vendors typically operate on small margins and may lack formal financial records, private banks perceive a higher risk of default on these loans, which could negatively impact their balance sheets.
Another factor contributing to the low participation of private banks is the relatively smaller number of accounts held by street vendors with these banks. Street vendors often do not meet the account criteria set by private banks or prefer the more accessible services of public sector banks. This disparity in banking relationships affects the distribution of loans under the PM SVANidhi Scheme.
Efforts to Increase Loan Distribution
To address these issues and encourage greater involvement from private banks, several measures can be considered. One approach could be to offer credit guarantees or subsidies that would reduce the risk for private banks when issuing loans to street vendors. Additionally, creating awareness among street vendors about the availability of these loans through private banks and simplifying the application process could help in increasing uptake.
Impact on Street Vendors
The success of the PM SVANidhi Scheme is critical for the recovery of street vendors who have faced economic hardships due to the lockdowns and restrictions imposed during the pandemic. Access to credit would empower them to rebuild and sustain their businesses, which are often the sole source of income for their families. The scheme also has the potential to stimulate local economies by enabling these micro-entrepreneurs to become active participants in the market once again.
Future Prospects
The PM SVANidhi Scheme represents a significant step towards the financial inclusion of street vendors, offering them a lifeline in the wake of the COVID-19 crisis. For the scheme to reach its full potential, it is essential that both public and private sector banks participate actively. By working together to overcome the challenges, the goal of empowering street vendors and fostering a climate of self-reliance can be achieved, contributing to the broader objective of an Atmanirbhar Bharat (self-reliant India).
