Speed Up Loans to Street Vendors: DFS Secretary Encourages PSBs in 2023
As of July 19, 2023, the plan has sanctioned 5.34 million applications, and 5.05 million applications had been paid out, totalling ‘6,472 crores.
On Thursday, Vivek Joshi, the Secretary of financial services (DFS), directed the heads of public sector banks (PSBs) to swiftly approve the permission or payment under the PM SVANidhi initiative for street sellers.
The finance ministry has issued a statement stating that they have requested banks to develop a plan and intensify their efforts to improve the digital onboarding process for street vendors. They have also asked banks to expand their digital payment capabilities.
As of July 19, 2023, the plan has sanctioned 5.34 million applications, and 5.05 million applications had been paid out, totalling ‘6,472 crores.
The DFS asked banks to hold workshops, seminars, and financial literacy programmes to educate street sellers about the PM SVANidhi initiative’s benefits and reward them for their success with digital transactions. In a separate meeting, Joshi presided over a review of financial inclusion programmes with PSB leaders. He conducted a thorough analysis of various government initiatives, such as the Pradhan Mantri Jan Dhan Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, Atal Pension Yojana, Pradhan Mantri Mudra Yojana, and Stand Up India campaigns.
The meeting covered topics relating to digital transactions, emphasizing promoting digital payments. Additionally, the Aspirational Blocks Programme (ABP) was highlighted.
The official also reviewed the progress of the decisions made at the consultative committee meeting about the formation of a special District Level Review Committee (DLRC) to draught a roadmap for a credit outreach campaign in credit-deficient areas and a plan for unbanked adults.
To bolster the economic revival of street vendors in the aftermath of the global pandemic, the Secretary of the Department of Financial Services (DFS), during a recent meeting in July 2023, urged Public Sector Banks (PSBs) to expedite the process of issuing loans to this sector.
Street vendors constitute a significant part of the informal economy, providing essential goods and services at affordable rates, thus, maintaining the dynamism of urban and semi-urban economies. However, the COVID-19 pandemic severely impacted their livelihoods as lockdown measures were implemented and public gatherings were restricted. To support them, PSBs have been tasked with providing much-needed financial aid through swift loan approvals and disbursals.
In a high-level meeting with the chiefs of PSBs, the DFS Secretary emphasized the need to expedite the sanctioning of loans to street vendors under the government’s particular scheme – the Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) Scheme. This scheme was launched in 2020 to help street vendors resume their livelihood activities disrupted due to the COVID-19 pandemic.
The PM SVANidhi scheme allows street vendors to apply for a working capital loan of Rs 10,000. The loan can be repaid in monthly instalments over a year. On timely or early repayment of the loan, an interest subsidy of 7% per annum is credited to beneficiaries’ bank accounts through Direct Benefit Transfer every quarter. The scheme also provides for an upward revision of the credit limit on the timely repayment of the loan.
Despite the importance of the PM SVANidhi Scheme, the rate of loan disbursement could have been faster. As of June 2023, only a fraction of the registered street vendors have received the loans, creating a gap that the DFS Secretary aims to bridge.
The Secretary urged PSBs to simplify the application process and reduce the time for loan sanctioning and disbursal. He highlighted the importance of using technology to achieve these goals, like leveraging data analytics for quicker loan approval decisions and utilizing digital platforms to reach potential beneficiaries.
Additionally, the Secretary called for increased collaboration between banks and local authorities to identify eligible vendors, organize awareness programs, and assist vendors in the application process. He also advocated for creating dedicated street vendor loan sections in banks to focus on this segment and handle their unique needs effectively.
Speeding up the loan process could have far-reaching implications. Not only would it provide immediate financial relief to street vendors, but it would also help revive the economy at the grassroots level. Timely financial aid can empower street vendors to rebuild their businesses, contributing to local economies and creating employment opportunities. Moreover, it would improve financial inclusion and bring a significant part of the informal sector into the formal financial system.
The initiative by the DFS Secretary to speed up loans to street vendors comes at a crucial time when the country is on the path to economic recovery. It is a welcome move that acknowledges the importance of street vendors in the economy and aims to support them through expedited financial assistance. It is a clarion call for PSBs to fulfil their societal obligations and contribute to the larger goal of financial inclusion and economic revival.
