PM SVANidhi Scheme, Launch Date, Features, Eligibility, Benefits

The Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme is a transformative initiative by the Indian government aimed at providing financial support to street vendors who have been adversely affected by the COVID-19 pandemic. Launched on June 1, 2020, under the Ministry of Housing and Urban Affairs, this scheme has been a lifeline for countless street vendors across the country. In this article, we will explore the key aspects of the PM SVANidhi Scheme.

What is PM SVANidhi Scheme?

The Ministry of Housing and Urban Affairs launched the PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) program on June 1, 2020. The Scheme was announced as a part of the Economic Stimulus-II under the Atmanirbhar Bharat Abhiyan. Its primary aim is to offer affordable working capital loans to street vendors, helping them recover their livelihoods that were severely impacted by the COVID-19 lockdown.

Initially, the scheme was set to run until March 2022. However, it has now been extended until December 2024, with a renewed focus on expanding the collateral-free affordable loan fund, encouraging greater use of digital transactions, and promoting the comprehensive socio-economic development of street vendors and their families. 42 lakh street vendors are to be provided benefits under PM SVANidhi Scheme by December 2024.

PM SVANidhi Scheme Important Facts

PM SVANidhi Scheme Objectives

The primary objectives of PM SVANidhi are as follows:

Facilitating Post-Lockdown Livelihood Recovery

The scheme aims to provide street vendors with accessible and affordable working capital loans, enabling them to reestablish their livelihoods after the widespread lockdown caused by the pandemic.

Encouraging Timely Loan Repayment

To foster a culture of responsible borrowing and lending, the program incentivizes vendors to consistently repay their loans through mechanisms like cash-back rewards and the opportunity to secure higher loan amounts for subsequent requirements.

Driving Digitalization

PM SVANidhi actively promotes the adoption of digital payment methods by acknowledging and rewarding street vendors who choose to make their loan repayments through digital channels. This initiative aligns with the broader national goal of advancing digital financial inclusion.

Salient Features of PM SVANidhi Scheme

The PM SVANidhi Scheme offers working capital loans with varying amounts of ₹10,000, ₹20,000, and ₹50,000 under different phases, each requiring repayment within 12, 18, or 36 months, respectively. Importantly, these loans are collateral-free, ensuring accessibility for vendors who lack traditional collateral.

The scheme promotes digital technology and mobile banking for the application and repayment of loans, fostering financial inclusion and endorsing a cashless economy. Identification of beneficiaries is facilitated through the issuance of digital ID cards, streamlining the application process.

Timely repayment of the loan is incentivized, as beneficiaries can become eligible for higher loan amounts in the future. Special provisions are in place to support women street vendors and those from Scheduled Castes (SC) and Scheduled Tribes (ST). Multiple lending institutions, including banks, microfinance institutions (MFIs), and non-banking financial companies (NBFCs), participate in disbursing these loans. Furthermore, the scheme encourages the formation of Street Vendor Committees (SVCs) to oversee program implementation at the local level.

A Credit Guarantee Fund has been established to incentivize lending institutions, and there are no prepayment penalties, allowing vendors to repay loans ahead of schedule without incurring additional charges. An effective grievance redressal mechanism is in place to address any concerns or issues raised by beneficiaries, ensuring the scheme’s effectiveness in supporting street vendors on their path to economic recovery.

PM SVANidhi Scheme Extension

The extension of the Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme, approved by the Cabinet Committee on Economic Affairs, marks a pivotal step in continuing vital support to street vendors. This decision, spanning from March 2022 until December 2024, is driven by the lingering effects of the COVID-19 pandemic on small businesses that remain unabated.

In recognition of this ongoing challenge, the allocation of funds for the PM SVANidhi Scheme has been significantly augmented, elevating the loan amount to Rs. 8,100 crore from the current Rs. 5,000 crore. This substantial increase is poised to furnish street vendors with the essential working capital to not only sustain their businesses but also to expand their ventures, fostering self-reliance and growth.

The extended tenure of the PM SVANidhi Scheme holds the promise of far-reaching benefits, particularly for around 1.2 crore urban citizens. By stretching lending opportunities till December 2024, several significant advantages are anticipated. This extension will lay the foundation for formal credit channels to become an integral part of street vendors’ access, offering a reliable source of credit that empowers them to strategize their business expansion effectively.

Moreover, the initiative aims to drive the adoption of digital transactions, aligning with the nation’s push towards a cashless economy. This multifaceted approach not only safeguards lending institutions against potential Non-Performing Assets (NPAs) but also contributes to the comprehensive socio-economic betterment of street vendors and their families. Ultimately, the extension of the PM SVANidhi Scheme resonates as a strategic move to fortify the resilience and prospects of street vendors, thereby contributing to the overall economic upliftment of urban communities.

PM SVANidhi Scheme Lending Institutions

The PM SVANidhi scheme collaborates with a diverse range of lending institutions to facilitate financial support to street vendors. These include:

• Scheduled Commercial Banks
• Regional Rural Banks
• Cooperative Banks
• Non-Banking Financial Companies
• Micro-Finance Institutions
• Self-Help Groups (SHG) Banks

These lending institutions collectively contribute to the scheme’s effectiveness in providing working capital loans to street vendors, ensuring inclusivity and accessibility for a wide spectrum of beneficiaries.

PM SVANidhi Scheme Eligibility

Eligibility for the PM SVANidhi Scheme is determined as follows:

Beneficiaries are eligible for the scheme if they belong to states or UTs that have formally notified Rules and a Scheme under the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014. However, street vendors in Meghalaya, which has its own State Street Vendors Act, are also eligible to participate.

Street Vendors: The scheme is open to all street vendors engaged in vending within urban areas. Previously, the scheme was accessible to all street vendors who were involved in vending on or before March 24, 2020.

How to Apply for PM SVANidhi Scheme?

The application process for the PM SVANidhi Scheme is straightforward and accommodates both online and offline channels. Street vendors have the option to apply through the Common Service Centres (CSCs) situated at multiple locations or via the dedicated PM SVANidhi portal.

PM SVANidhi Scheme Early Repayment Benefits

Beneficiaries who repay their loans on time or ahead of schedule will receive a 7% per annum interest subsidy, which will be deposited directly into their bank accounts every six months through a direct benefit transfer.

The program allows for an increase in the credit limit for borrowers who make timely or early loan repayments. This means that street vendors who consistently pay their instalments on time or before the due date can improve their credit scores, making them eligible for larger-term loans.

There will be no fines or charges imposed on borrowers who choose to clear their debt or loan before the originally scheduled repayment period. Early repayment, also known as loan resettlement, is encouraged under this scheme, and borrowers will not face any penalties for doing so.

PM SVANidhi Scheme Status

Over the past three years, the PM SVANidhi scheme has made significant strides in its mission. This initiative offers working capital loans to street vendors in three phases. Notably, it has extended microcredits to over 36 lakh street vendors nationwide. As of 31 July 2023, 51.35 lakh loans amounting to ₹ 6607.94 Cr have been disbursed under the 3rd tranche loan under PM SVANidhi Scheme.

Crucially, the scheme has emphasized digital onboarding and training as a core element. The Ministry has undertaken dedicated efforts to train all PM SVANidhi beneficiaries in conducting digital transactions, thereby not only facilitating their financial inclusion but also bestowing upon them a sense of social acceptance and dignity.

PM SVANidhi Scheme Benefits

• The PM SVANidhi Scheme provides valuable support to street vendors in India by offering them a working capital loan of up to Rs. 10,000, repayable over a one-year period in manageable monthly installments.
• A significant advantage is the 7% per annum interest subsidy credited directly to beneficiaries’ bank accounts on a quarterly basis for timely or early loan repayment, reducing the loan’s overall cost.
• Importantly, there is no penalty for early loan repayment. The scheme also encourages the adoption of digital transactions through cashback incentives of up to Rs. 100 per month, promoting financial inclusion and reducing cash reliance.
• Additionally, vendors who repay loans on time may qualify for an escalation of their credit limit, enabling future access to more substantial loans for business expansion.
• Implementation of the scheme is overseen by the Small Industries Development Bank of India (SIDBI).

PM SVANidhi Scheme UPSC

The PM SVANidhi Scheme, a pivotal government endeavour, has been introduced to offer robust assistance to street vendors across India. By extending accessible working capital loans, the initiative seeks to empower street vendors to resume their enterprises and enhance their quality of life.

The Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) Scheme holds notable significance not only for the UPSC Prelims Exam but also for the UPSC Mains Exam, particularly in the context of General Studies Paper 2, which delves into a comprehensive understanding of diverse government schemes and initiatives aimed at safeguarding and advancing the welfare of marginalized sections of society.

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