PM SVANidhi (PM Street Vendor’s Atma Nirbhar Nidhi) Scheme: Everything You Need to Know

The PM SVANidhi Scheme is a micro-credit facility aimed at providing street vendors with the financial means to restart their businesses disrupted by the COVID-19 pandemic. The full-form of PM SVANidhi Yojna is Pradhan Mantri Street Vendor's AtmaNirbhar Nidhi. This scheme offers collateral-free loans of up to Rs. 10,000 for a one-year tenure, supporting vendors to cover their everyday expenses and maintain their livelihood. The full form of PM SVANidhi highlights its goal to make street vendors self-sufficient and empowered to make their urban vending a dignified and viable career. If you are a woman looking to start your own business, you may also consider the udyogini yojana scheme, which offers subsidised loans to women entrepreneurs from underdeveloped areas.

Key facts about the PM SVANidhi Yojana

Salient features of PM SVANidhi

• Purpose: Provides affordable loans to street vendors to help them restart businesses affected by COVID-19. Along with the PM SVANidhi Scheme, you can also explore the Pradhan Mantri MUDRA Yojana for other financial assistance options aimed at entrepreneurs.
• Loan amount: Offers collateral-free working capital loans up to Rs. 10,000.
• Interest subsidy: Provides an interest subsidy of 7% per annum on timely/early repayment of the loan.
• Repayment tenure: Loans are repayable in monthly instalments over a period of one year. By repaying on time, you can also increase your eligibility for further loans, as you will build a strong credit history. Additionally, if you're in the manufacturing sector, you can take advantage of the Make in India scheme to receive support for establishing and growing your business.
• Credit score benefits: Timely repayment enhances the borrower's credit score, making them eligible for higher loans in the future.
• Digital transactions incentive: Encourages digital transactions by offering cashback incentives up to Rs. 1,200 per year.
• Eligibility: Targets over 50 lakh street vendors who were vending on or before March 24, 2020. This is part of a wider effort to encourage economic inclusion, and a great addition for those looking to grow small businesses is the PMEGP, which offers financing support to help establish new enterprises.

Objectives of PM SVANidhi Scheme

• Provide Financial Assistance: The scheme aims to support street vendors in accessing affordable loans to rejuvenate their businesses affected by economic disruptions. It seeks to ensure that vendors can continue their livelihood without financial strain. Another helpful initiative in this regard is the Mudra Loan, which offers a range of loan options to support small business owners in need of financial backing.
• Encourage Digital Transactions: By promoting digital payments, the scheme aims to integrate street vendors into the formal financial system and reduce their dependency on cash transactions. Incentives such as cashback offers are provided to encourage consistent use of digital payment methods.
• Facilitate Formal Credit: The scheme helps street vendors establish a credit profile which is crucial for accessing formal financial channels in the future. Building a credit history will enable vendors to secure larger loans and financial services more readily.
  

Background of the scheme

1. Launch date: Introduced on June 1, 2020, by the Ministry of Housing and Urban Affairs.
2. COVID-19 response: Designed as an economic relief measure for street vendors affected by the COVID-19 pandemic.
3. Target beneficiaries: Aims to assist over 50 lakh street vendors, including hawkers and rehriwala, across urban and peri-urban areas.
4. Government initiative: Part of the Atmanirbhar Bharat Abhiyan, focused on supporting the livelihoods of informal sector workers.
5. Financial inclusion: Enhances financial inclusion by providing working capital loans and bringing street vendors into the formal financial system.
6. Empowerment: Promotes self-reliance among street vendors through easy access to credit and support for digital transactions.

Benefits of PM SVANidhi Scheme

• Quick and Easy Credit: The scheme offers a streamlined application process that allows quick access to funds, ensuring that vendors can immediately address their financial needs. These loans are designed to be accessible with minimal procedural delays. For vendors looking for larger loan amounts to expand their business, the PM Standup India scheme can be a great option.
• Interest Subsidy: Vendors who repay their loans on time are eligible for a 7% interest subsidy, which reduces the cost of borrowing and encourages timely repayment. This subsidy is directly credited to the borrower's bank account, further easing their financial burden.
• Digital Incentives: To further the use of digital transactions, the scheme offers annual cashback up to Rs. 1,200, rewarding vendors for adopting digital payment systems. This initiative not only supports vendors financially but also promotes a shift towards a digital economy.
  

PM SVANidhi Loan Interest Rate

The PM SVANidhi Scheme offers a subsidised interest rate of 7% per annum. This rate is determined in accordance with prevailing loan interest rates provided by various institutions, including Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Self-Help Groups (SHGs), and Cooperative banks. However, the interest rate may vary if the loan is obtained from entities such as Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs) or Non-Banking Financial Companies (NBFCs), depending on RBI guidelines. In cases where non-NBFC lenders are not governed by RBI guidelines, interest rates align with those set for NBFC-MFIs by the RBI.

Working capital loans

• Purpose: Working capital loans are intended to provide street vendors with the necessary capital to cover daily operational expenses. Access to such funds is vital for maintaining and growing their businesses.
• Features: With features like quick disbursal and no requirement for collateral, these loans are designed to be vendor-friendly and supportive of their immediate financial needs. The process is streamlined to ensure vendors can focus more on their business and less on loan-related formalities.]
• Renewal: Upon successful repayment of the initial loan, vendors become eligible for subsequent higher loan amounts, providing an opportunity for business expansion. This renewal process is intended to continually support and encourage the growth of vendor businesses.
  

Rate of interest

• Competitive Rates: The scheme offers interest rates that are intentionally kept lower than typical market rates to make borrowing more attractive and manageable for street vendors. These rates aim to alleviate the financial burden on vendors, making it easier for them to sustain their operations.
• Interest Model: Interest on these loans is calculated using a simple interest model on a reducing balance method, which ensures that the interest burden decreases as the principal amount is paid off. This method is more beneficial for vendors as it reduces the total amount of interest paid over time.
• Benefit: The lower-than-average interest rates serve as a major advantage for vendors, making these loans more affordable compared to other commercial lending options. This is crucial in promoting financial inclusivity among street vendors.
  

Interest subsidy

• Subsidy Rate: The 7% annual interest subsidy provided under the scheme makes these loans even more affordable for vendors. It is designed to relieve the financial pressure on vendors by reducing the effective interest rate.
• Claim Process: The interest subsidy is credited directly to the vendor's bank account quarterly, ensuring they benefit regularly throughout the loan period. This system of disbursement helps maintain the financial health of vendors’ businesses.
• Eligibility: Eligibility for the subsidy is contingent on the regular repayment of the loan, promoting financial discipline among street vendors. This condition encourages vendors to maintain good credit behaviour.
  

Lending institutions under PM SVANidhi

1. Scheduled commercial banks: These banks provide structured financial products and services, offering working capital loans to street vendors under the PM SVANidhi scheme to support their business operations.
2. Regional rural banks: Focused on serving rural and semi-urban areas, these banks facilitate access to working capital for street vendors, ensuring financial support reaches underserved regions.
3. Cooperative banks: These member-owned financial institutions provide working capital loans with community-centric support, helping street vendors sustain and grow their businesses.
4. Non-Banking Financial Companies: NBFCs offer flexible and innovative working capital loan solutions, catering to the unique needs of street vendors who may not have access to traditional banking services.
5. Micro-finance institutions: Specializing in small loans, MFIs provide essential working capital to street vendors, promoting financial inclusion and enabling them to manage and expand their ventures effectively.
6. Self Help Groups (SHG) banks: These banks support street vendors through group-based lending models, providing working capital loans that encourage collective financial stability and empowerment within communities.

Eligibility criteria of PM SVANidhi Scheme

• Target group: The scheme is open to all existing street vendors engaged in vending in urban areas as of March 24, 2020. This inclusivity ensures that those economically impacted by the pandemic can benefit.
• Vendor validation: Vendors need to provide evidence of vending through a Certificate of Vending/Identity Card issued by the local Urban Local Bodies. This documentation is crucial for verifying the legitimacy and status of the vendors.
  
• Other requirements: The scheme also accommodates vendors operating in the surrounding developmental or peri-urban areas, expanding the reach of the scheme beyond conventional urban limits. This broad eligibility criterion is aimed at inclusivity, ensuring no vendor is left behind due to geographical constraints.
  

Documents required to apply for PM SVANidhi Scheme

• Identity proof: Applicants must submit valid identity proof such as an Aadhaar Card or Voter ID, which is essential for the verification process. This requirement ensures that the financial assistance reaches the intended beneficiaries.
• Vending certificate: A Vending Certificate issued by local municipal authorities is necessary to confirm the applicant's status as a street vendor. This certificate acts as a crucial piece of documentation for accessing the scheme's benefits.
• Bank account details: Vendors must provide their bank account details to facilitate the direct transfer of loan amounts and the disbursal of subsidies. This requirement is key to ensuring that the financial benefits are received promptly and securely.
  

How to apply for PM SVANidhi

To apply for a loan under the PM SVANidhi scheme, vendors need to fill out the PM SVANidhi application form available on the official PM SVANidhi portal. This form requires personal and business-related information, along with necessary documentation for verification. The application process is designed to be user-friendly, ensuring that street vendors can easily access the financial benefits offered.

How to check your PM SVANidhi Loan status online?

To check your PM SVANidhi loan status online, visit the official website pmsvanidhi.mohua.gov.in. Once there, provide your application ID and registered mobile number. This simple process allows applicants to access their loan status conveniently. By entering these details, individuals can stay updated on the progress of their application without hassle. This streamlined online system ensures transparency and ease of access for beneficiaries, empowering them to monitor their PM SVANidhi loan status efficiently and effectively.

Conclusion

The PM SVANidhi Scheme is a vital initiative aimed at supporting street vendors to recover and thrive post-pandemic by providing them with accessible financial solutions. Through its structured approach to loans and subsidies, the scheme not only helps vendors sustain their livelihoods but also encourages them to engage in the formal economy. For vendors looking to expand further, business loans available through various financial institutions can provide additional capital to grow their operations and enhance their economic stability.