While the national lockdown was imposed in March 2020 and several migrant workers found themselves stranded without any source of income, the Ministry of Housing and Urban Affairs on June 1, 2020 launched the Prime Minister’s AmtaNirbhar Nidhi (PM SVANidhi) program on June 1, 2020. minister.
What is the SVANidhi program?
The program aims to facilitate unsecured working capital loans of up to Rs 10,000 a year, to around 50 lakh street vendors across the country who have been affected due to the lockdowns, helping them restart their businesses. .
It also provides incentives in the form of an interest subsidy of seven percent per annum on the regular repayment of the loan. For the purpose of program administration, an end-to-end solution via an IT platform has been developed in collaboration with the Small Industries Development Bank of India (SIDBI), which is the implementing partner of the program.
Processing of loans under the program began on July 2, 2020.
Interest rates offered by banks for a loan under the program
As of February 16, 2021, over 37.3 lakh requests have been received under this program. Of these, over 19.6 lakh loans have been sanctioned and over 14.6 lakh loans have been disbursed.
However, the interest rates on loans to street vendors offered by some large public sector banks to benefit from the SVANidhi program are quite high.
The country’s largest lender, the State Bank of India, is offering an interest rate of 9.9% as part of this program. Union Bank of India gives 7.3 percent interest rate, UCO Bank gives 8.5 percent, while Indian Overseas Bank offers 8.1 percent interest rate. Punjab National Bank’s interest rate is slightly less than 6.9%.
However, Indian Bank and Bank of Baroda are the two banks that offer the highest interest rates at 13.5% and 12.7% respectively.
Insistence on the credit rating of beneficiaries by banks
While several public banks have fairly high interest rates for SVANidhi program beneficiaries, many of them also stress the credit ratings of those seeking loans. Interestingly, the majority of street vendors don’t even have a bank account or are part of the formal financial system.
State Bank of India, Punjab National Bank, and Bank of Baroda require a credit rating of at least 650 and above. Banks like UCO and Indian Overseas Bank don’t stress credit score at all and others like Indian Bank and Canara Bank, although they don’t stress credit score, yet they check their credit history. (street vendors) to see if they default or not, before offering loans.