PM Svanidhi: Micro-Credit Facility Scheme

  • On 1st June, 2020, the Ministry of Housing and Urban Affairs has launched a Special Micro-Credit Facility Scheme - PM SVANidhi (PM स्वनिधि ) - PM Street Vendor's AtmaNirbharNidhi, for providing affordable loans to street vendors.
  • Earlier, the Scheme was announced as a part of the Economic Stimulus-II under the Atmanirbhar Bharat Abhiyan.

Aim

  • It is aimed at enabling the street vendors to resume their livelihoods that have been adversely affected due to COVID-19 lockdown.

Need

  • The lockdown has affected the lives and livelihoods of many especially daily wagers including street vendors who businesses were affected due to the restrictions.
  • They usually work with a small capital base taken on very high interest rates from informal sources.
  • Further, they might have consumed their savings and high cost capital during the lockdown.
  • In such a time, there is an urgent need to provide affordable credit to them to ensure their business gets a boost.

Salient Features

Applicability

  • The scheme would benefit vendors, hawkers and people involved in goods and services related to textiles, apparel, artisan products, barbers shops, laundry services etc. in different areas.
  • The scheme is valid until March 2022.

Loan Facility

  • The vendors can avail a working capital loan of up to Rs. 10,000, which is repayable in monthly instalments within a year. The loans would be without collateral.
  • There will be no penalty on early repayment of loan.

Interest Subsidy

  • On timely/ early repayment of the loan, an interest subsidy @ 7% per annum will be credited to the bank accounts of beneficiaries through Direct Benefit Transfer on six monthly basis.

Role of Urban Bodies

  • Urban Local Bodies will play pivotal role in the implementation of the scheme.

SIDBI to be Technical Partner

  • Small Industries Development Bank of India(SIDBI) is the technical partner for implementation of this scheme.
  • It will manage the credit guarantee to the lending institutions through Credit Guarantee Fund Trust for Micro and Small Enterprises.

Harnessing Technology for Empowerment

  • In line with the Government’s vision of leveraging technology to ensure effective delivery and transparency, a digital platform with web portal/ mobile app is being developed to administer the scheme with end-to-end solution.
  • The IT platform will also help in integrating the vendors into the formal financial system.
  • This platform will integrate the web portal/ mobile app with UdyamiMitra portal of SIDBI for credit management and PAiSA portal of MoHUA to administer interest subsidy automatically.

Encouraging Digital Transactions

  • The scheme incentivises digital transactions by the street vendors through monthly cash back.

Focus on Capacity Building

  • Government in collaboration with State Governments, State Missions of DAY-NULM, ULBs, SIDBI, CGTMSE, NPCI and Digital Payment Aggregators will also launch a capacity building and financial literacy programme of all the stakeholders and IEC activities throughout the country.

Significance

  • This is for the first time in India’s history that street vendors from peri- urban/ rural areas have become beneficiaries of an urban livelihood programme.
  • It is for the first time that Microfinance Institutions, Non-Banking Financial Company, Self Help Groups have been allowed in a scheme for the urban poor due to their ground level presence and proximity to the urban poor including the street vendors.

Impact

  • This scheme will go a long way in enabling them to resume work and earn livelihoods.
  • Over 50 lakh people, including vendors, hawkers, thelewalas, rehriwala, etc. in different areas/ contexts are likely to benefit from this scheme.
  • The scheme provides for escalation of the credit limit on timely/ early repayment of loan to help the vendor achieve his ambition of going up on the economic ladder.

Source : Civil Services Chronicle Online, June, 2020