Banking Article, Banking Finance 2021, Banking Finance January 2021

Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) Scheme

Street Vendor:

 

 

कोरोना वैश्विक महामारी की अभूतपूर्व स्थिति में देश ने, हमारे गरीब भाईबहनों ने, विशेषकर रेहड़ीठेलापटरी पर सामान बेचने वाले श्रमिक साथियों ने तमाम मुश्किलों के बावजूद अद्भुत संयम और संघर्षशक्ति दिखाई है। उनके आर्थिक हितों के लिए, उनके ताकतवर बनाने के लिए हम सत और समग्र प्रयास कर रहे हैं।“-……… प्रधानमंत्री श्री नरेंद्र मोदी

Economic development of the nation is dependent on the development of various sectors like MSMEs, Retail, and Agriculture and so on. MSMEs are the strongest drivers of economic development. The MSME sector in India is exceedingly heterogeneous in terms of size of the enterprises and variety of products and services.

Street vending is one of them under micro sector. In India, Street vending is an importance profession because it provides informal employment opportunities and forms an important part of retail market in Indian economy. It is a vital economic activity in urban area in India.

Street vending is the largest informal sector which caters to the livelihood of the urban poor.  During the economic reforms in our country, this sector has faced many challenges in its journey and various welfare steps have been taken by various governments to come out of such situation. O

ne of such step is the launch of “Pradhan Mantri street Vendor’s AtmaNirbhar Nidhi  (PM SVANidhi) Schemeby the Ministry of Housing and Urban Affairs on 01st June 2020.It is micro credit facility for providing affordable working capital loan to street vendors to resume their livelihoods

At present more than ten million people in India are engaged in street vending activities and they play an important role in urban formal economy. Their role is significant because they are ensuring the availability of the goods and services at our door steps at very affordable rates.

They are known by various names such as vendors, hawkers, thelawala, rehriwala, theliphadwa etc. in different area/contexts. The goods supplied by them include vegetables, fruits, ready to eat street food, tea, pakodas, breads, eggs, textiles, apparel, footwear, artisan products, books/stationery etc.

Apart from supply of goods, they are also providing us services like Barber shop, cobbler shop, pan shop, laundry services etc. During this corona-19 pandemic, It has been seen that street vendor’s business and life are badly impacted.

Usually they run the business with very small capital base, which they would have consumed during this covid-19 lockdown. Hence to resume their businesses and to feed their family, they are urgently needed working capital, otherwise their personal as well as their family’s life may spoil.

So the Government of India has brought this scheme for their welfare. This is part of a special economic package (Atmanirbhar Bharat Abhiyan) of Rs. 20.00 Lakh Crore (equivalent to 10% of India’s GDP) with the aim to make our country independent against the tough competition in the global supply chain and to help in empowering the poor laborers, migrants who has been adversely affected by COVID-19 pandemic.

It is one of the special economic packages to facilitate easy access to credit for the street vendors.

Now, Let us see the salient features of this scheme:

Objective of this scheme:

  • To facilitate working capital loan up to Rs 10000.00
  • To incentivize regular repayment and
  • To reward digital transactions

The above scheme will help the street vendors to open new opportunities to this sector and to move up the economic ladder.

Eligibility criteria of Beneficiaries

The scheme is available to all street vendors engaged in vending in urban areas as on or before March 24, 2020. The eligible vendors will be identified as per the following criteria:

  1. Street vendors in possession of Certificate of Vending / Identity Card issued by Urban Local Bodies (ULBs)
  2. The vendors, who have been identified in the survey but have not been issued Certificate of Vending / Identity Card

Provisional Certificate of Vending would be generated for such vendors through IT based platform. ULBs will issue permanent Certificate of Vending and Identification Card within one month.

  • Street Vendors, left out of the ULB-led identification survey or who has started vending after completion of the survey and has been issuing Letter of Recommendation (LoR) to that effect by the ULB / Town Vending Committee (TVC) and
  1. The vendors of surrounding development / peri-urban / rural areas vending in the geographical limits of the ULBs and have been issued letter of Recommendation (LoR) to that effect by the ULB / TVC

Eligibility of States / UTs

The above scheme is available in those states/UTs which have notified Rules and Scheme under Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act 2014. Beneficiaries from Meghalaya, which has its own State Street Vendors Act may, however participate.

Identification of Beneficiaries left out of the survey or belonging to the surrounding Rural Areas

While identifying the vendors belonging to Category iii & iv above (Eligibility criteria of Beneficiaries), The ULB/TVC may consider any of the following documents to issue letters of recommendation:

  1. The list of vendors, prepared by certain States/UTs for providing one-time assistance during lockdown or
  2. A system generated request sent to ULBs / TVCs for issue of LoR based on the recommendation of the letter after verifying the credentials of the applicant or
  • The membership details with the vendors association or
  1. The documents in possession buttressing his claim of vending or
  2. Report of local enquiry conducted by ULB/TVC involving Self-Help Group (SHGs), Community Based Organizations (CBOs) etc.

Note: ULBs shall complete the verification and issuance of LoR within 15 days of the submission of application. ULBs will ensure to include all the eligible vendors by adopting any other alternative way for identifying such vendors.

Town Vending Committee (TVC)

TVC’s role in identification of beneficiaries is crucial. As per The Street Vendor’s Act 2014, TVS consists of maximum 18 members. The composition is

  1. Municipal commissioner or Chief Executive officer of ULB as chairperson
  2. 50% of members (including chairperson) from local authority departments, police and street vendors & traders association etc
  • 40% of vendors representing street vendors
  1. 10% of members nominated from NGOs/CBOs

Vendors went back to native places due to Covid-19

  • Such vendors even if they are from rural/semi-urban area or City dwellers, would be eligible for the loan once they return back after normalization of the situation and resume their business.

Features of the Product

  • Urban street vendors can avail a working capital loan of up to Rs 00, which is repayable in monthly installments within one year
  • No collateral security is required
  • One time or early repayment, the vendors will be eligible for the next cycle with an enhanced limit
  • No prepayment penalty charges from vendors

Rate of Interest

Types of Banks / FIs Scheduled commercial Banks, RRBs, Small Finance Banks, Cooperative Banks & SHG Banks NBFC, NBFC-MFIs etc. MFIs (non NBFC) & other lender categories not covered under the RBI guidelines
Rate of Interest As per prevailing rates of interest As per RBI guidelines for the respective lender category Interest rates under the scheme

 

Interest Subsidy

  • The vendors availing loans under the scheme are eligible for interest subsidy @7%
  • The interest subsidy will be credited into borrower’s account quarterly
  • Lenders will submit quarterly claim of subsidy for the quarters ending June 30, September 30, December 31 and March 31 during each financial year
  • Only standard accounts will be considered for subsidy on respective claim dates and only for those months during which the account has remained standard in the concerned quarter
  • The interest subsidy is available up to 31st March 2022
  • The subsidy will be available on first and subsequent enhanced loans up to that date
  • In case of early payment, the admissible amount of subsidy will be credited in one go

Promotion of Digital Transactions by Vendors

The scheme incentivizes digital transactions by the street vendors through monthly cash back

  1. Cash back incentive is available for digital transactions
  2. The network of lending institutions and digital payment aggregators like NPCI (for BHIM), PayTM, GooglePay, BharatPay, AmazonPay, PhonePe etc. will be used to onboard the street vendors for digital transactions.
  • The onboarded vendors would be incentivized with a monthly cashback in the range of Rs 50.00 – Rs 100.00 as per following criteria

 

No of transactions On executing 50 eligible transactions in a month On executing the next 50 additional eligible transactions On executing the next additional 100 or more eligible transactions
Incentive Rs 50.00 Rs 25.00 (On reaching 100 eligible transaction Rs. 50+25= Rs 75.00) Rs 25.00 (On reaching 200 eligible transactions Rs 50+25+25=Rs 100.00)

Note: Eligible transaction means: A digital payout or receipt with minimum value of Rs 25.00

Illustration under the cash-back and interest subsidy under the scheme for a loan amounting to Rs 10000.00

Month Principal (Rs.) Interest @24% (Rs.) EMI (Rs.) Interest subsidy (7%) (Rs.) Cash Back Incentive (Rs.) Total benefit (Rs.)
(A) (B) (C) (D) (E) (D+E)
        1 746.00 200.00 946.00 58.00 100.00 158.00
2 761.00 185.00 946.00 54.00 100.00 154.00
3 776.00 170.00 946.00 50.00 100.00 150.00
4 791.00 154.00 946.00 46.00 100.00 146.00
5 807.00 139.00 946.00 42.00 100.00 142.00
6 823.00 122.00 946.00 36.00 100.00 136.00
7 840.00 106.00 946.00 32.00 100.00 132.00
8 856.00 89.00 946.00 27.00 100.00 127.00
9 874.00 72.00 946.00 22.00 100.00 122.00
10 891.00 55.00 946.00 17.00 100.00 117.00
11 909.00 37.00 946.00 12.00 100.00 112.00
12 927.00 19.00 946.00 6.00 100.00 106.00
Total 10,001.00 1348.00 11349.00 402.00 1200.00 1602.00
% w.r.t. interest   100%   30% of interest 88% of interest 118%

 

Inference: “Maximum Cashback amount and interest subsidy amount would sum up to Rs. 1600.00 (Rs 1200.00 cash back and Rs 400.00 as interest subsidy), which is 118% of the total interest of Rs 1348.00 on a loan of Rs 10000.00 with an interest rate of 24%”

Eligible lenders

  • Scheduled Commercial Banks
  • Regional Rural Banks (RRBs)
  • Small Finance Banks (SFBs)
  • Cooperative Banks
  • Non-Banking Finance Companies (NBFCs)
  • Micro Finance Institutions (MFIs)
  • SHG Banks established in some States/UTs e.g. Stree Nidhi etc.

Credit Guarantee

  • The scheme has a provision of Graded Guarantee Cover for loans sanctioned
  • It is administered by Credit Guarantee Fund Trust for Micro and small Enterprises (CGTMSE), which will be operated on portfolio basis
Default First Loss default (Up to 5%) Second Loss (beyond 5% up to 15%)
Guarantee coverage 100% 75% of default portfolio

Note:

  • Maximum Guarantee coverage will be 15% of the year portfolio.
  • The periodicity of filing of claims by lending institutions will be quarterly.
  • This guarantee cover will be without any charges.

Integrated IT application for scheme Administration

  • An Integrated IT platform along with Mobile App will be developed by the Ministry for administration of the scheme.
  • This portal will provide one stop solution for administration of the scheme
  • The IT platform will be integrated with the vendors data bases across the states/UTs, BCs / Constituents/ agents of lending institutions, digital payment aggregators and PAiSA portal of MoHUA and Udyami Mitra portal managed by Small Industries Development Bank of India (SIDBI)

Implementation mechanism (Flowchart)

Meeting to explain the scheme objective and implementation mechanism will be organized by the ULB involving TVC members, BCs/ constituents / agents of lending institutions, vendors associations, SHG federations etc.
Applicants having Certificate of vending / ID card issued by ULB and those covered in the ULB led identification survey may approach or to be approached by the representatives of the Banks, NBFCs, and MFIs
The lender’s representatives, including BCs and Agents will search the successful cases in IT platform/ Mobile App and verification to be done through an OTP sent to the beneficiary’s mobile.

 

A provision in the IT application to generate a provisional CoV / ID for the street vendors covered in the identification survey and not issued CoV/ID

 

After verification, BC / Agent will fill-in the application form and upload the necessary documents
The filled in application will then move electronically to ULB/TVC. The ULB/TVC will verify the details within a fortnight and then the application will move to the concerned lending institutions for sanction. A copy of letter of recommendation will be given to the applicant also
Street vendors not covered in the identification survey may approach the BC/Agent with the required documents for letter of Recommendation
Preparatory activities will be carried out during June 2020 and loans will commence from July 2020

Implementation partners

Small Industries Development Bank of India (SIDBI) will be the implementation partner of the ministry of housing and urban affairs for the scheme administration. It will leverage the network of lending institutions including the SCBs, RRBs, Cooperative Banks, NBFCs and MFIs for the scheme implementation

Committee for steering & Monitoring of the scheme

At Central Level At State / UT level AT ULB level
A steering committee under the chairmanship of secretary HUA A steering committee under the chairmanship of principal secretary / Secretary of Urban development/ Municipal administration. Meeting once in 3 months A steering committee headed by Municipal commissioner / Executive officer (EO) and supported by the TVC to sponsor loan application and monitor implementation of the scheme. This committee will meet monthly.

 

E-governance

To make the scheme more accessible and in line with the vision of leveraging technology and to ensure effective delivery and transparency, a digital platform with web portal/mobile app is being developed to administer the scheme with end-to-end solution e.g. launch of PM SVANidhi Moble App on 17th July 2020.

It is a user friendly digital interface for Lending Institutions (LIs) and their field functionaries for sourcing and processing loan applications. This platform will integrate the web portal / mobile app with UdyamiMitra portal of SIDBI for credit management and PAiSA portal of MoHUA to administer interest subsidy automatically.

Steps for Applicant-How to apply for a street vendor loan?

  • Visit the website : pmsvanidhi.mahua.gov.in
  • Click on Login and select Applicant
  • Enter your mobile number and select captcha and request OTP
  • Verify OTP sent to your mobile number
  • Then complete the 4 steps process
  1. Check Vendor category
  2. Fill Application form
  • Upload Documents
  1. Submit Application

Planning to apply for loan (Follow three steps before starting the online Application  Process)

  • Make sure that all the required documents are with you
  • Ensure that your mobile number is linked with Aadhaar
  • Check your eligibility status as per scheme rules

Tracing of Application by lenders: As PMSVANidhi portal is integrated with Udyamimitra portal (UMP) managed by SIDBI. Details of application process flow is shared by SIDBI is as under

  • Most banks are already onboarded on UMP
  • An excel sheet shall be provided to Banks containing IFSC code of the branches presently mapped with UMP. Banks will be required to update the pin code, Active status for PM SVANidhi of the Branches in the excel sheet and send back to us for updating in the system
  • Bank’s admin is empowered to create any new branch and its users
  • Branch can create its users and forward link to its users (employee/BC Agent) for Mobile App download
  • In case any bank is not onboarded on UMP, they will be helped to do so
  • Only branches which will be carrying PMSVANidhi business may be marked as active in excel sheet so that applications in market place can be seen by / flow to only those branches.

Process 1: Direct Application by SV on PMSVANidhi portal – Process illustration

After submission of application by Street Vendor, Banks registered on Udyamimitra portal (managed by SIDBI) will be able to see applications in market place along with an identity check report & credit rating report and score. Once the lender “picks up” the application, it will reflect in “New Application Section (NAS)” of his dashboard.

Now lender will sanction the proposal as per its internal process/policy. Once lender marks the application as completed, the application moves to “Completed Application Information Section (CAIS)”. In CAIS only system based process will take place like Validation of UPI ID (by NPCI) and online transmission of request of lender for letter of recommendation to concerned ULB (Only in case of vendor category C2 and D2)

Process 2: Application sourced by Banks – on Program Mobile App

Lenders will be provided a mobile app to originate the loan applications. Mobile app user will log in through their user id. After checking all the sections in the app and after submission, the application will reach the New Application Section (NAS) of the respective branch along with an identity and credit rating report and score and then process 1 above will be followed

Process 3: Application sourced by lenders through their own system – Process illustration

Under this system, Banks uses their existing IT system and processes for sourcing applications. Banks will carry out Aadhaar validation / EKYC on their own system and share the Unique Reference No (URN) on the portal while submitting application form.

After completing credit process, they will submit information to Udyamimitra portal through Excel or API. Each application will be submitted with a unique application number and on submission on CAIS scheme; application number shall be generated by the system for future reference. Other process will be the same as done in process 1 or 2.

Finally, lenders update details on CAIS section for disbursement and quarterly interest subsidy calculations.

CONCLUSION: So far the government has received over 5.40 lakh loan applications within 43 days (Till 13th August 2020) of commencement of the lending process under this scheme (Ref: PM SVANidhi portal) and it is increasing day by day.

Government has target to increase it to 50 lakh applications. More than 1.15 lakh application already got sanctioned till date and it is also increasing very fast. On August 7, 2020 Housing and Urban affairs Secretary Mr. Durga Shanker Mishra launched “Letter of Recommendation module for PM SVANidhi Scheme”.

The purpose of this module is to give access to street vendors, who doesn’t have ID card, CoV (Certificate of Vending) and also not in the surveyed list for getting benefit under the scheme. This is end to end and digitally enabled process wherein the eligible vendors can request for “letter of recommendation” from ULB and after getting it, he/she can apply for loan under the scheme.

The vendor will issue CoV or ID card within 30 days. Such provision will help the people to reach to the scheme, who were hitherto unable to get benefit under the scheme. This is the first time in India’s history that poor street vendors from peri-urban / rural area have become beneficiaries of an urban livelihood programme and that also through MFIs, NBFCs and SHGs etc.

Such programme will not only help to improve the economic conditions of the poor citizens but also improve the economy and employment status in the country.

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