The scheme was launched in 2020, as a micro credit scheme for providing affordable working capital loan to street vendors to resume their livelihoods that have been adversely affected due to Covid-19 lockdown.
Objectives:
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- To facilitate collateral free working capital loan of upto Rs10000 at subsidized rate of interest.
- To incentivize regular payment of loan through interest subsidy.
- To reward digital transactions by a way of cashbacks.
Features:
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- It is a central sector scheme.
- Duration of scheme: initially till March 2022, now extended till December 2024.
- Target beneficiary: Street vendors/ hawkers vending in urban areas, as on or before March 24, 2020, including the vendors of surrounding peri-urban and rural areas.
- Vendor should either possess certificate / Identity card issued by Urban Local Body or have been identified in survey.
- Small Industries Development Bank of India (SIDBI) is the implementing partner of MoHUA.
- The vendors availing loan under the scheme, are eligible to get an interest subsidy of 7%.
- The scheme will incentivize digital transactions by vendors through cash back facility.
- Lending institutions: scheduled commercial banks, Regional Rural Banks, Small Finance Banks, Cooperative Banks, NBFCs, MFIs and SHG Banks.
Significance:
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- Empowerment of street vendors: the scheme offers working capital to provide financial support to street vendors affected by COVID-19 pandemic. The scheme has benefited 60.94 lakh street vendors across the country, as per Minister Hardeep S Puri.
- Boost to local economy: The street vendors often source their goods locally, and so the income generated through their businesses circulates within the local economy, benefiting other small businesses and communities. This results in income and employment generation at local level.
- Financial inclusion: the scheme promotes financial inclusion by providing street vendors, access to formal credit who usually operate in the informal sector and have limited access to banking services. This inclusion can enhance their financial literacy.
- Formalization of Informal sector: It encourages street vendors to access formal credit and institutional support can facilitate the formalization of the informal sector. It will lead to better regulation and increased compliance with government regulations and standards.
- Women empowerment: As informed by union minister Hardeep S Puri, 41% of loan has been given to women. The scheme has helped in increasing women’s participation in labor force thus empowering them both as socially as well as financially.
- Inclusive entrepreneurship: it has promoted entrepreneurship among all sections of society. As data shows:
- 75% loan beneficiaries come from non-general category.
- OBCs account for 44%of total disbursement, while SCs/STs account for 22%
- 65% of the borrowers in PM SVANidhi are in the age-group of 26-45.
- Increase in income of street vendors: it has resulted in increase of their monthly income as according to recent data the first loan resulted in an additional income of 1,955 per month.
Issues:
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- Loan amount: the beneficiaries under the scheme are entitled to a loan amount of Rs 10000. This is not sufficient to expand or restart a business especially in urban areas where cost of living is high. The amount may not be enough for a vendor to upgrade his/her equipment.
- Stringent documentation requirements: some street vendors particularly those belonging to marginalized communities lack literacy and it becomes difficult for them to meet the documentation requirements for assessing loans under the scheme. This hinder the ability of many eligible beneficiaries to benefit from the scheme.
- The studies reveal that even after the start of the scheme there is not much improvement in street vendors assessing formal credit from other sources. It has been observed that only 9% of the beneficiaries had loans from other financial institutions.
Way forward
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- Simplified application process: Streamlining the application process and reducing documentation requirements to make it easier for street vendors with limited literacy or resources to apply for the scheme. For this mobile application and online portals can be used.
- Enhance outreach and awareness: various methods can be opted to spread awareness about the eligibility, documentation, and benefits of the scheme. These include organizing campaigns, using social media and local government channels for wider outreach.
- Training and capacity building of street vendors for skill development and skill upgradation. The scheme should be implemented by integrating with others schemes like skill India, Digital India etc.
- The street vendors should be provided with tailored support services such as financial literacy, business management skills, and market linkages. This will help them fully utilize the loan amount and make informed decisions. This can be done by collaborating with NGOs, SHGs, private sector or other community-based organizations.
