Under the PM-SVANidhi, a special micro credit facility introduced for street vendors in July 2020 amid the first lockdown after the Covid-19 outbreak, loans are offered in three tranches – ₹10,000, ₹20,000 and ₹50,000.
The government is planning to double the amount of the first tranche to ₹20,000, according to people aware of the matter. The housing and urban affairs ministry is holding discussions with banks involved in disbursing loans on how to shape the three tranches and the amounts to be loaned.
The decision is being taken as the demand for the first tranche of loan of ₹10,000 has declined. In the first year of implementation within nine months, banks had disbursed 2 million loans of ₹10,000. In the second year, 900,000 loans were given and this year till September 200,000 loans of ₹10,000 were disbursed.
“The scheme was initiated when the vendors were hit hard by Covid-19 and were facing a severe financial crisis. A loan of ₹10,000 with the government standing as guarantor was a big amount for them. This demand has hit a plateau as vendors are not facing the same financial difficulties as in 2020,” said a senior official.
The ministry has also received repres- entations from associations in Delhi and Mumbai to increase the first tranche loan. “Since this was the first microcredit experiment of the Centre, there are new learnings which the government is now planning to implement,” said the official.
The Centre is also encouraged by the low numbers of repayment defaulters under the scheme. According to the ministry’s statistics, non-performing assets under the scheme are less than 14%. In certain high-uptake states like Telangana, there are examples like Stree Nidhi Bank of Telangana where the loan recovery is 98%.
Those tapping into the scheme are largely a migrant segment. The initiative could yield dividends as could be seen in UP polls where beneficiaries became dedicated BJP voters. The ministry has taken PM-SVANidhi a step forward with the SVANidhi Se Samriddhi initiative, which connects family members of SVANidhi beneficiaries to other flagship schemes.