PM SVANidhi Scheme: Transforming Urban Street Vendor Empowerment

PM SVANidhi Scheme: Transforming Urban Street Vendor Empowerment
PM SVANidhi Scheme: Transforming Urban Street Vendor Empowerment

The PM SVANidhi Scheme, initiated on June 1, 2020, has ushered in a remarkable transformation for urban street vendors in India. This micro-credit program, aimed at offering street vendors collateral-free working capital loans, with a strong emphasis on empowering this underserved community, has recently been the subject of analysis by the Economic Research Department (ERD) of the State Bank of India. The report underscores its substantial influence, especially in terms of fostering gender equality and driving socio-economic progress.

The report underscores that an impressive 43 percent of beneficiaries of the PM SVANidhi Scheme are female street vendors, a testament to its role in empowering urban women with entrepreneurial opportunities. In a society where women often confront economic hurdles and limited avenues, this scheme has emerged as a force for gender parity, equipping urban women with the means to attain financial independence and contribute to their families’ well-being.

One of the most striking features of this scheme is its inclusivity. Approximately 75 percent of loan beneficiaries come from groups outside the “general category,” illustrating the ability of well-conceived policy initiatives to bring about transformative changes. The PM SVANidhi Scheme has reached out to those belonging to disadvantaged segments of society, offering them the chance to enhance their economic standing and overall quality of life.

Since its inception, the PM SVANidhi Scheme has witnessed remarkable success, with nearly 7 million loans disbursed across its three tranches. The 1st tranche offers loans up to ₹10,000, the 2nd tranche up to ₹20,000, and the 3rd tranche up to ₹50,000. This initiative has benefited over 5.3 million street vendors, with a cumulative value exceeding ₹9,100 crore, equipping them with the working capital needed to expand and sustain their businesses.

The ERD’s assessment reveals that the scheme has fostered financial responsibility among its beneficiaries. The ratio of individuals repaying the first loan of ₹10,000 and seeking the second loan of ₹20,000 stands at 68 percent. Moreover, the ratio of those repaying the second loan of ₹20,000 and pursuing the third loan of ₹50,000 is an impressive 75 percent. This pattern of responsible borrowing and repayment underscores the scheme’s effectiveness and the commitment of its beneficiaries.

The report also underscores the diverse religious backgrounds of the PM SVANidhi Scheme beneficiaries. Approximately 80 percent of borrowers are Hindu, while the remaining 20 percent belong to other religious groups. This statistic emphasizes the idea that poverty transcends religious, caste, creed, or gender boundaries. The scheme has been successful in reaching out to individuals in need, regardless of their religious affiliations.

Another notable impact of the PM SVANidhi Scheme is the economic upliftment it has provided to beneficiaries. The average debit card spending of PM SVANidhi account holders has increased by 50 percent to approximately ₹80,000 in FY23, compared to FY21. This signifies a substantial increase in average annual spending in just two years, thanks to a relatively modest initial capital infusion into informal urban entrepreneurs.

To promote regular repayments, the scheme offers a 7 percent interest subsidy, motivating beneficiaries to maintain financial discipline. Additionally, digital transactions are rewarded with cashback of up to ₹1,200 per year, encouraging the use of digital payment methods and promoting financial inclusion.

The PM SVANidhi Scheme has made a significant impact in urban areas, with approximately 5.9 lakh borrowers in six major cities and 7.8 lakh borrowers hailing from the top 10 million+ population cities. This initiative has truly transformed the lives of urban street vendors, empowering them to thrive in bustling metropolitan environments.

The ERD report acknowledges the pivotal role of public sector banks in achieving this remarkable milestone. Notably, approximately 31 percent of total loans have been disbursed by the State Bank of India alone, and the top five banks, including Bank of Baroda, Union Bank of India, Punjab National Bank, and Canara Bank, collectively accounted for two-thirds of the total disbursements. Their support has been instrumental in realizing the goals of the PM SVANidhi Scheme.