Under PM-SVANidhi, a special microcredit 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 plans to double the amount of the first installment to ₹20,000, according to people familiar with the matter. The Ministry of Housing and Town Planning is in discussion with the banks involved in loan disbursement on how to shape the three tranches and the amounts to be loaned.
The decision is made as the demand for the first loan tranche of ₹10,000 has diminished. In the first year of implementation in nine months, banks had disbursed 2 million loans of ₹10,000. In the second year, 900,000 loans were granted and this year till September, 200,000 loans of ₹10,000 were disbursed.
“The scheme was started when the vendors were hit hard by Covid-19 and were facing a severe financial crisis. A loan of ₹10,000 with the government acting as guarantor was a big amount for them. This request reached a plateau because sellers are not facing the same financial challenges as in 2020,” a senior official said.
The ministry has also received representations from associations in Delhi and Mumbai to increase the first tranche loan. “As this was the Centre’s first experience with microcredit, there are new learnings that the government is now looking to implement,” the official said.
The Center is also encouraged by the low number of loan defaults under the program. According to ministry statistics, non-performing assets under the scheme are less than 14%. In some high participation states like Telangana, there are examples like Stree Nidhi Bank of Telangana where loan recovery is 98%.
Those who benefit from the program are largely a segment of migrants. The initiative could pay dividends as can be seen in UP polls where recipients have become dedicated BJP voters. The ministry has advanced PM-SVANidhi with the SVANidhi Se Samriddhi initiative, which connects family members of SVANidhi recipients to other flagship programs.