The Prime Minister Street Vendors AtmaNirbhar Nidhi Scheme or PM SVANidhi was launched in June 2020 to provide collateral free working capital loans of up to Rs 10,000, to help street vendors left without income post the imposition of lockdown.
The loans are given to street vendors to restart their business and after the scheme was launched on June 1, 2020, the disbursal of loans had started on July 1, 2020.
However, compared to public sector banks, participation of private banks is quite nominal in terms of disbursing loans to street vendors.
Poor private sector institutions participation
The Ministry of Housing and Urban Affairs in collaboration with Finance Ministry had envisaged the scheme to enhance the role of micro finance institutions (MFIs), non banking finance companies (NBFCs) and private banks in ensuring financial inclusion at the grass root level.
This was mainly because street vendors, though spread across cities in urban India, are also present in large numbers in rural areas.
Till December 2021, six months after loan disbursal had started under SVANidhi scheme, out of 32 lakh applications received by banks seeking loans from applicants, private sector banks had received only 1.5 lakh applications, according to official sources.
Prior to this, during the first three months of the scheme, i.e. between July and September 2020, only around four to five per cent applications had been received by private banks from applicants seeking loans.
Why street vendors prefer public sector banks?
Stakeholders involved in implementation of the scheme have said that majority of street vendors have accounts in public sector banks, whose interest rates are lower than those of private sector banks, that is why they prefer state-owned banks over private financial institutions.
Also public sector banks have branches spread out in various parts of the country, especially in rural areas, therefore vendors prefer dealing with them, sources added further.