PM SVANidhi Scheme Objectives
1. Working Capital Loans
Urban street vendors can apply for a Working Capital (WC) loan of up to Rs.10,000 for a one-year term of the loan in monthly installments. This loan does not require any collateral. The street sellers will be eligible for the next cycle of the WC loan with a higher limit if they return this loan early or on schedule. There is no prepayment penalty if you return your WC loan before the specified date.
2. Rate of Interest:
Scheduled Commercial Banks, Small Finance Banks (SFBs), Regional Rural Banks (RRBs), Cooperative Banks, and SHG (self-help groups) Banks will charge the prevalent rate of interest. The interest rates for Non-Banking Financial Companies (NBFCs), Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs), and other lender categories will be set by the RBI. In the case of non-NBFC MFIs and other lender types not covered by the RBI rules, interest rates would be applicable to the extent of the RBI guidelines for NBFC-MFIs.
3. Interest Subsidy:
Street vendors who take out WC loans under the plan are eligible for a 7% interest subsidy. On a quarterly basis, the interest subsidy is credited to the borrower’s account. The interest subsidy will be in effect until March 31, 2022. Up to that point, the interest subsidy is provided on the first and subsequently increased loans.
4. Promotion of Digital Transactions by Street Vendors:
Through the cash-back provision, this initiative provides an incentive for street vendors to adopt digital transactions. The network of lending institutions and digital payment aggregators like Paytm, NPCI (for BHIM), GooglePay, AmazonPay, BharatPay, PhonePe, and others would help in onboarding vendors for digital transactions. Onboarded vendors would be compensated with a monthly cashback ranging from Rs.50 to Rs.100.