Impact of the PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi)

Context- A study on the impact of the PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi), has found that the first tranche of `10,000 led to an additional annual income of `23,460 for each beneficiary.

Key Highlights 

• The study was commissioned by the Union Ministry of Housing and Urban Affairs, and was carried out by the Centre for Analytical Finance of the Indian School of Business (ISB).
• The study conducted by ISB covered 5,141 vendors across 100 urban local bodies in 22 states.
  • For 95% of those surveyed, the PM-SVANidhi loan was their first-ever bank loan, while for 72% of them, it was the first business loan.
• According to the study, 94% of those beneficiaries who had availed the first loan of Rs 10,000, they used it to make “business investments”.
  • It was 98% in case of those who had availed the second loan.
• The first loan resulted in an additional income of `1,955 per month, or `23,460 in total during the loan’s one-year duration.
  • Also this was in line with the estimates of marginal returns of small businesses in many parts of the world.
• 13.9% of all the loans disbursed had been classified as non-performing assets (NPAs), meaning no payments had been made for three months and more.
  • The NPAs were the highest during Covid-19 pandemic and declined over time, with only 9% of loans disbursed in 2022 turning into NPA.
• The debt-to-income (DTI) ratio of the beneficiaries (9%) was lower than what was expected of small businesses, reflecting the “high creditworthiness” of the vendors.
  • After the launch of PM SVANidhi, there had been no significant improvement in the street vendors getting formal credit from other sources — only 9% of the beneficiaries had loans from other financial institutions.

About PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi)

• It was launched by the Ministry of Housing and Urban Affairs on June 01, 2020.
• Purpose: To offer affordable Working Capital loans to street vendors to resume their livelihoods which have been adversely affected due to the Covid-19 lockdown.
• It is a micro-credit facility that offers street vendors a collateral-free loan of Rs 10,000 with low prices of interest (under 12%) for a period of 12 months, aiding the vendors in getting back on their feet economicly.
• The duration of the scheme first of all was until March 2022. It has been prolonged until December 2024, with a central point on improved collateral-free affordable loan corpus, expanded adoption of virtual transactions and holistic socio-economic development of the Street Vendors and their households.

Who is Eligible for the Loan?

• All vendors who have been vending from or earlier than (March 24, 2020) and with a certificate of vending can avail the mortgage.
• As in step with the Street Vendors Act 2014, the Town Vending Committees (which contains the nearby government and vendors from a place) issue certificates of vending after a survey has been performed of all the vendors.

PM SVANidhi Scheme Benefits

• Vendors can avail of a working capital loan of as much as Rs. 10,000, that’s repayable in monthly installments within the tenure of a year.
• On well timed/ early repayment of the loan, an interest subsidy @ 7% per annum could be credited to the financial institution accounts of beneficiaries through Direct Benefit Transfer on a quarterly basis.
  • Here could be no penalty on early repayment of loan.
• The scheme promotes virtual transactions through cash back incentives up to an amount of Rs. 100 per month.
• The providers can avail the facility of escalation of the credit limit on timely/ early repayment of loan.
• Implementation agency: Small Industries Development Bank of India (SIDBI)

Source: Indian Express

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