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PM SVANidhi Scheme

Introduction

How many times a day do we hear a howl from the streets calling to buy a range of things that starts with food items and vegetables and goes on till infinite other stuff like cotton for pillows or doormats or cutleries or cotton-candies? I am sure plenty.

Living in India has its own charms, for example, a lot of us have one such beautiful memory of our childhood when on the way of coming home from schools or playgrounds, in the broad hot afternoons, we used to stop to buy ice-creams or kulfis or those frozen lumps of flavored ice from that stall at the corner of our locality. Oh! The simple pleasures of life! No matter where we live in this country, this one thing will always be relatable.

It was everywhere, streets, railway stations, trains, bus stops, busses, markets, tourist attractions and the list goes on.

But ironically what gave us such treasures of memories are often left unnoticed. Who were the ones selling them? How many of them took it as a profession and raised the informal economy of the country? What are they doing now?

What began in 2020, turned out to be a disaster in just a few months, the whole world endured a common fear of the worst and went into lockdown. Today, even after more than a year, we’re in partial lockdown. Streets are closed, India stands still. But what about those street sellers and vendors whose lives depended on those streets? How are they surviving this ‘halt’ in life? 

One thing that can never be underestimated or doubted is the contribution of these people who take up the jobs of delivering our basic needs right to our doorsteps in the cheapest way possible towards the ultimate goal of the renounced Make in India Campaign.

And finally, the time has come when the widely unnoticed ones are looked upon and thought of. On June 1, 2020, amidst the fearsome outbreak of Novel Coronavirus, the Ministry of Housing and Urban Affairs announced the launch of the much-awaited and needed PM Street Vendor’s AtmaNirbhar Nidhi, or as we commonly call it PM SVANidhi Scheme.

The main motive of this Scheme is to provide credits for the working capital to the street vendors of the country wherein they can take Loan for one year, collateral-free and at low-interest rates to resume their businesses and help in these dire times of need.

Features of PM SVANidhi Scheme

  • To begin with, it is a Central Sector Scheme, meaning, they are funded directly by the central ministries.
  • The scheme will be implemented till March, 2022.
  • Any urban vendors as well as the ones working in the surrounding rural and semi-urban areas on or before March 24. 2020 will be eligible to apply for the loans.
  • Initially a working capital of Rs. 10,000 will be provided.
  • On timely or early repayment of which, the vendor shall be provided with an Interest Subsidy of 7%. Along with it, those vendors will also be granted higher loan amounts in the preceding transactions.
  • To promote Make in India and Digital Transactions, the vendors shall be provided with monthly cash back incentives. These cashback ranges from Rs. 50 to Rs 100.
  • The loans are completely collateral-free.

Objectives of PM SVANidhi Scheme

To unleash its full capacities, these loans are kept simple with profitable and helpful objectives that reach the masses and are easily understandable. The potentials of these loans are so much so that it cannot just help the ones in need but also secure their near future and implement the use of technology.

  • Working capital loan: the prime objective of this scheme is to provide a working capital loan of Rs. 10,000 at subsidized rates of interest to anyone and everyone eligible.
  • Digital Transactions are rewarded: this creates an awareness, helps to maintain safety protocols in the times of a virus outbreak, brings everyone to the same platform and at the same time rewards the vendors with cashback that helps them financially and encourages the deepest and most rooted citizens of the country to take a step towards Digitalization.
  • Incentivize regular loan repayment: the lives of daily wagers are not easy, taking a loan may help their situations but repaying those same becomes a nightmare in their lives. Incentivizing the timely loan repayment encourages them morally and at the same time makes the process a lot easier, beneficial and cost-efficient.

List of Lending Institutions

To reach the general masses, banks have been chosen wisely and specifically. Here’s a list of all the lending institutions partnered with the scheme:

  1. Scheduled Commercial Banks
  2. Small Finance Banks (SFBs)
  3. Regional Rural Banks (RRBs)
  4. Cooperative Banks
  5. Self-help group Banks (SHG)
  6. Micro Finance Institutions (MFIs)
  7. Non-Banking Financial Companies (NBFCs)

Eligibility Criteria for PM SVANidhi Scheme

Although the loan is available for all the street vendors active on and before 24th March, 2020, here’s a list of criteria that identifies the eligible candidates:

  • Only the street vendors recognized by the ULBs or Urban Local Bodies and/or the ones possessing the Certificate of Vending or ULB issued Identity card.
  • The Vendors who have been recognized in the survey but haven’t received a Certificate or Identity card will be provided with a Provisional Certificate of Vending. As per the Government’s request, those vendors will be provided with permanent identification cards by the ULBs with immediacy.
  • Those street vendors without the above-mentioned identification can also become eligible by having issued a Letter of Recommendation (LoR) by the ULB or TVC (Town Vending Committee)
  • The vendors residing and active in the surrounding peri-urban or rural areas can also become eligible by having the same letter of recommendation by ULB or TVC
  • ULB/TVC Verified vendors who left their area of operation due to COVID-19 (prior to or during) will be eligible for the loan after they come back and resume their businesses.

Documents Required by the ULBs to Generate LoR

For the candidates left out of surveys completely and/or are from the surrounding Rural Areas, here’s the list of documents that will be required to get LoR by the ULB and TVC:

  • ULB application form with candidate details
  • Membership details of those individuals with any of these:
    • National Association of Street Vendors or India (NASVI)
    • National Hawkers Federation (NHF)
    • Self-Employed Women’s Association (SEWA)
  • Any possession of supporting documents that claim the individual’s vending career
  • Report of local inquiries conducted by TVC or ULB involving community-based organizations and/ or Self-Help Groups (SHGs)

The ULBs are to verify the candidates within 15 days of submission of application by the candidate.

Rate of Interest

Lending Institution

Rate of Interest

  1. Scheduled Commercial Banks
  2. Regional Rural Banks (RRBs)
  3. Small Finance Banks (SFBs)
  4. Co-operative Banks
  5. Self-Help Group Banks (SHG)

As per their prevailing rates of interest

  1. Non-Banking Financial Companies (NBFC
  2. Non-Banking Financial Companies – Microfinance Institutions (NBFC-MFI)

Interest rates as directed by the RBI for respective category of the lender

 Micro Finance Institutions (Non-NBFC)

Interest rate same as directed by RBI for NBFC-MFIs

Interest Subsidy

Every financial year is divided quarterly and each quarter ends on June 30, September 30, December 31 and March 31. On these mentioned days, the lenders will have to submit claims for the interest subsidies and all the vendors availing the loan under Svanidhi Scheme will become eligible for a 7% interest subsidy which then will be transferred directly to their bank’s account. However, here are certain points that one will need to keep in mind:

  • In case of early repayment, the subsidy shall be credited to the borrower’s account in one go.
  • The subsidy will be available till 31st March, 2022 and on the first and thereafter subsequent amplified loans till the given date.
  • The subsidy will only be accepted in respect of Standard (non-NPA) accounts of the borrowers and only in the months of the concerned quarters where the account remains Standard.

Credit Guarantee

The scheme not only thinks about the vendors but also of the lenders by providing credit risk mitigation to the lenders for all the loans sanctioned which is administered by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). This will be operated on a portfolio basis wherein the periodicity of lending institutions filing claims will be quarterly. Here are more details on the portfolio:

  • For up to 5% first loss default: 100%
  • For beyond 5% up to 15% second loss: 75% of default portfolio
  • A maximum of 15% of the year portfolio will be given as a guarantee coverage.

Promotion of Digital Transactions

With the help of a cashback facility, this scheme is all set to promote digital transactions that spread awareness to the core of the masses and be beneficial to them at the same time. Another huge benefit of vendors for using digital transactions as a method of payment, apart from getting cashbacks and maintaining safety during a pandemic is building a credit score with each usage.

This scheme deals with people who usually are not as aware of the benefits of credit scores. Eventually when they take loans, it turns out to be not very cost-efficient. This method not just educates them about the system but also builds one as they use it.

In the present days, everyone owns a smartphone and everyone is accessible to the internet, therefore it becomes easier to implement it and metastasize the scheme. Here’s a list of the commonly preferred digital payment aggregators and lending institutions:

  • NPCI (BHIM)
  • PayTM
  • GooglePay
  • AmazonPay
  • PhonePe
  • BharatPe

When we talk of these aggregators, they in themselves are very rewarding. But keeping that aside from the scheme also provides cashback based on the following terms:

  • Each payment to be eligible needs to be of and above Rs. 25
  • On making 50 eligible digital transactions in a month the cashback amount will be Rs. 50
  • On making the next 50 such transactions in the same month (i.e., 100) the cashback amount will be Rs. 75
  • On making the next 100 transactions in the same month (i.e., 200) the cashback amount will be Rs. 100.

How to Apply for the SVANidhi Scheme

To apply for loans under SVANidhi Scheme, all the eligible street vendors need to address a Banking Correspondent or any Agent of MFIs of their areas. Common Service Centre (CSC) built up that helps the vendors all throughout the application process. The ULBs have a list of all the identified street vendors and this personnel will guide the registered/ identified vendors in accordance with the lists through the application process.

There are two ways for applying, one through the mobile app and another through the portal – https://pmsvanidhi.mohua.gov.in/. One can apply directly or with the help of the above-mentioned assisting bodies. It is important for one to check and verify the status of their eligibility before approaching any facilities to avoid crowds during the pandemic.

Documents Required for Application

For easier accessibility, the documents required for applying for this loan are kept very simple and hassle-free. Here’s the list of documents you’ll be needing during the application process:

  • Certificate of Vending/ Identity card/ Letter of Recommendation issued and verified by the ULB or TVC
  • Identity Proof and Address Proof by any one of the following:
    •  Aadhaar Card
    • Voter Id
    • Ration Card
    • Driving License
    • PAN Card
    • MNREGA Card

Why choose SVANidhi Scheme?

Starting a business is comparatively easier than restarting one. The recent conditions due to the pandemic have left the industries shattered and disintegrated. But at the same time, there’s a huge need for essential materials arising as well.

This calls for new opportunities and bigger growing spaces. With the working capital loans provided by PM SVANidhi Scheme, the street vendors get the elbow room to re-start their businesses and flourish in the market. These loans, which by now we know, are rewarding, beneficial, cost-efficient and lets the vendors resume their lives on a positive and tension-free note.

If we look at the numbers, a total of 41,66,224 applications have been submitted among which 24,05,408 have been sanctioned. The total amount disbursed is 20,52,432.

Therefore, it can be assured that this scheme is, with time and due course, reaching the right masses in the right possible way.

PM SVANidhi Scheme FAQs:

1. Who is the technical partner of the scheme?

SIDBI or Small Industries Development Bank of India is the technical partner of this scheme, to be precise, for the implementation of the scheme.

2. What are the Pre-Application Steps to avail the loan?

There are three simple pre-application steps to avail the loan: ● Firstly, one needs to understand the necessity and requirements of the loan and its application. ● Secondly, it is very important to have one’s mobile number linked with their Aadhaar Card. if it is not, one would need to get it done before applying. ● Thirdly and lastly, one would need to check their eligibility status as per the rules set by the scheme.

3. What is CSC?

Common Service Centers or CSC is a mission mode project under the Digital India Program that caters Pan-India networks to remote areas of the country and enables the Government’s mandate of financially, digitally and socially inclusive society. In simple words, the CSCs are like access points that deliver the essential public utility services like healthcare, educational, financial and agricultural services along with social welfare schemes to citizens even in the rarest corners of the country.

4. How do people without familiarity with digital transactions access the features?

To make sure the scheme educates and creates awareness of the various features of digital platforms, a MFI agent or payment aggregator will be assigned, who will approach the borrower to help conduct sample transactions and teach the basics and fundamentals of digital transactions. Apart from this every vendor will be provided with a QR Code and a debit card to ensure the proceedings.

5. How long does it take to get the loan approved?

After the submission, the loan takes less than 30 days to get approved if the documents provided are correct and verified. One needs to apply through the mobile app or web portal and will be able to check the real-time status of the application through the same.

6. How to ensure one is added on the survey list or ULB list?

To ensure the eligibility status of the vendors, they will need to check the list made by the ULB or TVC which is available on the official website of the Ministry of Housing and Urban Affairs (MoHUA).

7. What is the tenure of a Rs. 10,000 loan?

The tenure given for the working capital loan id of one year.

8. Is there any penalty for pre-closure of the loan?

No, there is no penalty for early repayment or pre-closure of the loan. On the contrary, it is rewarding as it allows the candidates to apply to enhanced WC loans in the next terms.

9. Is there any collateral on these loans?

No, these loans are completely collateral free.

10. What is the maximum amount of incentive provided?

The maximum amount of incentive in the form of cashback provided is Rs. 1200 for each individual per loan.

11. Is e-KYC mandatory while applying for loans under SVANidhi Scheme?

Yes, e-KYC is mandatory for all the direct loan accounts applying for WC loans under PM SVANidhi Scheme.

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