Empowering Street Vendors: Unveiling the PM SVANidhi Scheme

The PM SVANidhi scheme, introduced by the Ministry of Housing and Urban Affairs, Government of India, is a significant initiative aimed at providing affordable working capital loans to street vendors and hawkers. In particular, this scheme was launched in June 2020 to offer financial assistance to these vendors, especially those who faced economic hardships due to the COVID-19 pandemic.

Purpose and Facilities:

PM SVANidhi provides collateral-free working capital loans of up to ₹10,000 to eligible street vendors, which enables them to resume and strengthen their small businesses. Additionally, the scheme promotes digital transactions through cashback incentives, rewards and facilitates access to credit limit escalations on timely loan repayments.

Eligibility and Loan Amount of PM Svanidhi:

The scheme caters to all street vendors who were vending in urban areas as on or before March 24, 2020. 

Eligibility factors include:

  • Possession of a Certificate of Vending/Identity Card issued by Urban Local Bodies (ULBs)
  • Inclusion in the SVANidhi survey, even if lacking a UL B-issued certificate (a provisional certificate will be generated for such vendors)

Amount of loan offered: 

This scheme offers a simple and low margin loan structure for the vendors, helping them to gradually increase their borrowing capacity as they successfully repay their loans. 

  • Initially the loan amount is Rs. 10,000 with a tenure of 1 year and it can be repaid in monthly installments. The interest rate will be 7% per annum. 
  • Once the first loan is repaid successfully in the given time then the vendors can apply for the loan upto Rs. 20,000. The tenure of this loan will be  18 months and the interest rate will remain the same. 
  • The third tranche is available for the vendors who have successfully repaid their second loan on time. The amount this time can go upto Rs 50,000 with a tenure of 36 months with the same interest rates as above. The repayment can be done in monthly installments. 

Required documents:

Applying for PM SVANidhi is simple and requires minimal documentation:

  • Aadhaar card for identity proof
  • Bank account details
  • The mobile number linked to Aadhaar
  • Self-declaration of vending activity 
  • Vendor ID card 

Interest and Subsidy:

The loan includes an annual interest rate; however, timely or early repayment offers an attractive benefit: a 7% interest subsidy credited directly to the vendor’s bank account through Direct Benefit Transfer.

Tenure and Margins:

Regarding tenure and margins, the loans are structured with a one-year term, providing flexibility in repayment along with no penalties for early settlements. Additionally, while no security deposits (or margins) are required, banks may impose transaction limits on digital payments made through the loan account. In this way, the PM SVANidhi scheme ensures both accessibility and flexibility for vendors.

Moratorium and Repayment:

Moreover, the scheme includes a six-month moratorium period on principal repayment, enabling vendors to concentrate on re-establishing their businesses without the burden of immediate financial pressure. Additionally, vendors who make regular and timely repayments become eligible for larger loan amounts in subsequent phases – ₹20,000 in the second phase and ₹50,000 in the third. Thus, the PM SVANidhi scheme not only supports vendors initially but also incentivizes responsible repayment for future financial growth.

Application process of PM Svanidhi:

PM SVANidhi offers easy application options such as:

  • Through Participating Micro Finance Institutions (MFIs) identified by the Ministry of Housing and Urban Affairs (MoHUA)
  • Online portal: https://pmsvanidhi.mohua.gov.in/
  • UMANG App: Download the UMANG app and access PM SVANidhi services under the MoHUA section

Benefits of PMSVINidhi scheme:

  • Access to affordable working capital
  • Interest subsidy on timely repayments
  • Cashback incentives for digital transactions
  • Potential for higher loan amounts in subsequent tranches
  • Financial inclusion and economic empowerment

List of Banks offering PMSVINIdhi scheme:

Government Banks:

  • Central Bank of India
  • State Bank of India (SBI)
  • Union Bank of India
  • Bank of Baroda
  • Punjab National Bank (PNB)
  • Bank of India (BOI)
  • Canara Bank
  • Indian Bank

Private Banks:

  • IDFC First Bank
  • Axis Bank
  • IndusInd Bank
  • HDFC Bank
  • ICICI Bank
  • RBL Bank

Let’s join hands and support this transformative initiative proposed by the Government of India.