The Covid-19 outbreak was disastrous for street sellers. As a result, the need of the hour was to fund street sellers' working capital requirements in order to support their businesses. The Ministry of Housing and Urban Affairs introduced the PM Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi) on June 1, 2020, with the goal of easing financial difficulties for street vendors by providing low-interest loans and providing holistic support for their economic and social development. The scheme promises to provide collateral-free working capital loans of up to INR10,000/- for a one-year term to approximately 50 lakh street vendors in urban regions, including adjoining peri-urban/rural areas.
PM Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi) | UPSC IAS IPS IFS
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In different areas/contexts, street vendors are referred to as vendors, hawkers, thelewala, rehriwala, and so on. They offer various goods and services such as vegetables, street food, footwear, pan shops, and tea shops to distinguish a few categories. The scheme shall be implemented with the support of The State / UT / Urban Local Bodies ("ULBs") list of recognised street sellers will be made available on the Ministry's/State Government's/ULBs' website and a Web Portal created for the purpose. The Small Industries Development Bank of India (SIDBI) would be the Ministry of Housing and Urban Affairs' implementation partner for scheme administration.
The scheme is a Central Sector Scheme, which means it is wholly sponsored by the Ministry of Housing and Urban Affairs, and its aims are as follows:-
- To ease working capital loans of up to ₹10,000;
- To incentivise timely payback; and
- To encourages digital payments.
The initiative will help to legitimize street vendors and provide new prospects for this sector to progress upward in the economic ladder.
Beneficiary Eligibility Criteria
The following parameters will be used to identify qualifying vendors:-
- Street vendors have to have ownership of a Certificate of Vending / Identity Card issued by Urban Local Bodies ("ULBs").
- For vendors identified in the survey but not issued a Certificate of Vending / Identity Card, a provisional Certificate of Vending (“COV”) would be generated for such vendors through an IT-based Platform. ULBs are encouraged to provide permanent Certificates of Vending and Identification Cards to such vendors quickly and positively within one month.
- Street Vendors left out of the ULB-led identification survey or who have started vending after completion of the survey and have been issued a Letter of Recommendation (“LoR”) to that effect by the ULB / Town Vending Committee (“TVC”).
- Vendors from adjacent peri-urban/rural areas who are vending within the geographical borders of the ULBs and have received a Letter of Recommendation (LoR) to that effect from the ULB / TVC.
a) Brief Product Information: Urban street sellers will be eligible for a Working Capital (WC) credit of up to ₹10,000 with a one-year repayment period via monthly payments. The financial institutions will not require any security for this loan. Vendors will be entitled to the following cycle of the working capital loan with an increased maximum if they repay on time or in advance. The vendors will not be charged a prepayment penalty for repayment before the specified date.
b) Rate of Interest: Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Cooperative Banks, and SHG Banks will have their prevailing interest rates applied. Interest rates for NBFCs, NBFC-MFIs and other lender categories will be set by the RBI as per the respective lender category.
c) Interest Subsidy: Vendors who take out loans under the plan are eligible for a 7% interest subsidy. The interest subsidy would be credited to the borrower's account on a quarterly basis. Up to that point, the subsidy will be offered on the first and subsequent improved loans. In the event of early payment, the maximum amount of subsidies will be credited all at once.
d) Promotion of Digital Transactions by Vendors: Through a cash-back facility, the scheme will incentivize vendors to conduct digital transactions. The transaction trail established will help suppliers improve their credit scores and meet future credit requests. To onboard street vendors for digital transactions, a network of financial institutions and digital payment aggregators such as NPCI (for BHIM), PayTM, GooglePay, BharatPay, AmazonPay, PhonePe, and others will be utilized.
The onboarded merchants would be compensated with a monthly payback of ₹50 to ₹100 based on the following characteristics:-
- For completing 50 eligible transactions in a month, the vendor will receive ₹50;
- For completing the next 50 additional eligible transactions in a month, the vendor will receive ₹25 (i.e. for completing 100 eligible transactions, the vendor will receive ₹75); and
- For completing the next 100 or more eligible transactions, the vendor will receive ₹100.
e) Credit Guarantee: The Scheme includes a provision for Graded Guarantee Coverage for loans sanctioned, as shown below, to be managed by the Credit Guarantee Fund Trust for Micro and Small Enterprises (“CGTMSE”), which will function on a portfolio basis:-
- First Loss Default (up to 5%): 100 %
- Second Loss (above 5% to 15%): 75% of the default portfolio
- The maximum guarantee coverage will be 15% of the portfolio for the year.
All loans made under the scheme by each financial institution will be considered for coverage under the guarantee. The filing of claims by financial institutions will be done quarterly. This guaranteed protection will be available to all participating lending institutions at no cost.
f) The Town Vending Committee ("TVC"): Is significant in identifying recipients. According to the Street Vendors Act of 2014, a TVC can have up to 18 members, with the following structure:-
- Municipal Commissioner or Chief Executive Officer of ULB as Chairperson;
- 50% of members (including the chairperson) representing various local authority departments, police, and street vendors and traders' associations, among others;
- 40% of members representing street vendors; and
- 10% of members are nominated by NGOs/ CBOs.
g) Branding and Communication: The Scheme's standard branding and communications guidelines will be provided separately. To reach the targeted beneficiaries in an effective and engaging manner, innovative usage of diverse platforms, including regional and social media, will be encouraged. MoHUA will deliver the necessary Information, Education, and Communication (“IEC”) and capacity-building modules.
h) Integrated IT application for Scheme Administration: The Ministry will create an integrated IT platform as well as a mobile app to manage the scheme. This Portal will serve as a one-stop shop for scheme management. The IT Platform will interface with vendors' databases across States/UTs, BCs/ constituents/agents of lending institutions, digital payment aggregators, the MoHUA PAiSA portal, and the Small Industries Development Bank of India's Udyami Mitra portal (SIDBI).
Applicants (street sellers) who have a ULB-issued Certificate of Vending / ID Card and are part of the ULB-led identification survey may approach or be solicited by representatives of banks, NBFCs, and MFIs. Beneficiary verification will take place in successful circumstances using an OTP issued to the beneficiary's cell phone. In the IT application, a provision will be established to generate a provisional CoV/ID for the Street Vendors covered in the identification survey who have not yet been issued a CoV/ID. Following verification, the Agent will complete the application form and upload the required papers.
The completed application information will subsequently be electronically transmitted to ULB / TVC. The ULB / TVC must check the facts within a fortnight, after which the application will be forwarded to the relevant lending institution for approval. Street vendors who were not included in the identification survey may provide the documents to the Agent. The Agent will guarantee that these types of beneficiaries' identification documents are uploaded first, and then a similar process as described above will take place. Before delivering it to the lender, ULB will verify the facts and attach a letter of reference. The candidate will also receive a copy of the letter of recommendation.
Committees for Steering & Monitoring of the Scheme
For effective implementation and supervision of the programme, the following management structures will be in place at the Central, State/UT, and ULB levels:-
- At the central level, a Steering Committee chaired by the Secretary, HUA
- At the state/UT level, a Monitoring Committee chaired by the Principal Secretary/Secretary of Urban Development/Municipal Administration shall meet at least once every three months.
- At the ULB level, a Committee will be chaired by the Municipal Commissioner/ Executive Officer (EO) and backed by the Town Vending Committee to sponsor loan applications and supervise programme execution. Every month, this committee will meet.
Was it a Success ?
The Prime Minister's Cabinet Committee on Economic Affairs, chaired by Shri Narendra Modi, approved the extension of lending under the Prime Minister Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi) beyond March 2022 until December 2024, owing to its enormous success with a focus on enhanced collateral-free affordable loan corpus, increased adoption of digital transactions, and holistic socio-economic development of Street Vendors and their families. The Scheme planned to make loans of Rs. 5,000 crores available. Post approval, the loan amount has been doubled to Rs. 8,100 crores, giving the street vendors working capital to expand their businesses and making them AtmaNirbhar.
The funding for digital payment advertising, including cashback to sellers, has also been increased. The clearance is expected to benefit approximately 1.2 crore Indians living in cities. Significant progress has already been made under PM SVANidhi. As of 2022, 31.9 lakh loans had been sanctioned, with 29.6 lakh loans totalling Rs. 2,931 crores disbursed. In terms of the second loan, 2.3 lakh loans have been sanctioned, with 1.9 lakh loans totalling Rs.385 crore issued. The Street Vendors who have benefited have completed over 13.5 crore digital transactions and have received a payback of Rs.10 crore. Interest Subsidy in the amount of Rs.51 crore has been paid.
The proposed extension of the Scheme was necessary since the circumstances that led to the Scheme's introduction in June 2020, namely the pandemic and consequent stress on small enterprises, have not entirely abated. The extension of lending until December 2024 will help to institutionalise access to formal credit channels, provide an assured source of credit to help them plan their business expansion, increase the adoption of digital transactions, reduce the impact of potential NPAs on lending institutions, and provide holistic socio-economic upliftment for street vendors and their families.