Govt looks to extend street vendor credit scheme during festive push

Is looking to increase limit of working capital loan to Rs 25,000 from Rs 10,000 currently, apart from raising maximum guarantee it provides on loans to 25% from 15%

The Centre is looking to expand its flagship credit scheme for street vendors PM Street Vendors Atmanirbhar Nidhi (PM SVANidhi), and come up with its second version in a move to push credit during the festive season amid ongoing economic recovery.

The government is looking to increase the limit of working capital loan up to Rs 25,000 under the PM SVANidhi scheme from Rs 10,000 currently, an official said.

The Centre is also looking to raise the maximum guarantee it provides on loans to 25 per cent on such loans, the official said. Currently, the government provides maximum guarantee coverage of 15 per cent of the year portfolio. Although this would increase the budgetary allocation under the scheme, the impact would not be significant, the official said.

The PM SVANidhi was launched as a relief measure in June 2020 to provide credit for working capital to street vendors to resume their business impacted by the Covid-19 pandemic. The scheme is a Central Sector Scheme, fully funded by the Ministry of Housing and Urban Affairs (MoHUA) and vendors, availing loans under the scheme, are eligible to get an interest subsidy of 7 per cent.

All street vendors engaged in vending as on or before March 24, 2020, can avail working capital loan up to Rs 10,000 with tenure of 1 year that needs to be repaid in monthly instalments. On timely or early repayment, the vendors are eligible for the next cycle of working capital loan with an enhanced limit. About 28.66 million first term loans have been sanctioned by banks, out of which loans to 25.78 million borrowers have been disbursed. About 2,07,781 first term loans have already been repaid. For the second term loan, 32,630 total applications have been received, out of which 20,011 loans have been sanctioned and loans to 13,422 borrowers have been disbursed.

The discussions regarding the changes have taken place, and would help such borrowers avail more credit as most of these vendors are due for the second term loan. “This would help in providing credit to such vendors during the festive season,” the official quoted above said. The higher amount would make the scheme attractive for vendors, and at the same time bring them under the formal credit channel, he added.

The proposed expansion of the scheme would soon be place before the Cabinet for approval by the Cabinet Secretariat, the official said.