Less Than 20 Per Cent Of Street Vendors Defaulted On PM-SVANidhi Loans Despite Being Hit Hard By Second COVID Wave: Report

Hit hardest by the second Covid-19 wave in 2021-22, almost half of street vendors who availed loans of Rs 5,000-Rs 10,000 under Centre's PM-SVANidhi scheme defaulted on their repayment

However, from July 2022 to February 2023, only 17.51 per cent of the total loans turned bad or became non-performing.

Under the PM-SVANidhi scheme, loans with a minimum ticket size of Rs 5,000-10,000 had a much higher non-performing rate, according to the government data cited by The Indian Express.

The percentage of bad loans rose from 3.98 per cent in 2020-21 to 48.18 per cent in 2021-22.

As of 10 February 2023, a total of 19.09 per cent of loans disbursed under the scheme had turned bad in 2022-23.

According to data obtained by the newspaper under the Right to Information Act from the Union Ministry of Housing and Urban Affairs, a total of 33.69 lakh loans ranging between Rs 5,000 and Rs 10,000 each were disbursed over a period of three years from July 2020 to February 10, 2023.

The total amount disbursed adds up to Rs 3,345 crore with a maturity period of one year. Out of these loans, 15.05 lakh have been fully repaid as of 10 February 2023.

Officials were cited in the IE report as saying that EMIs to be paid by the street vendors started at around Rs 934 a month, depending on the principal amount and the interest charged by banks after the government subsidy of 7 per cent.

Over a period of three years till 10 February 2023, the government paid interest subsidy of Rs 57.05 crore.

The Ministry, however, did not to disclose the complete value of non-performing assets (NPAs) at the end of every year.

Instead, it only revealed data on the percentage of loan accounts that became non-performing in a year.

PM-SVANidhi launched in July 2020 offers term loans to street vendors, where repayment of the first loan in a year can make the vendor eligible for a second loan up to Rs 20,000 to be repaid in two years. Successful repayment of the second loan also qualifies the vendor for a third loan of up to Rs 50,000.

Over the course of three years starting in July 2020 until February 10, 2023, PM-SVANidhi lending primarily consisted of first term loans, amounting to Rs 3,345 crore out of the total Rs 4,898.75 crore, which were received by 33.69 lakh accounts.

Second term loans amounted to Rs 1,461 crore, and were extended to 7.32 lakh accounts. The third term loans amounted to Rs 94 crore.

According to the officials cited in the IE report, the rate of NPAs being reported by participating banks and the spike in 2021-2022 pointed to the impact of the second wave.

The NPA rates were calculated by subtracting the number of repaid and timely-paid loans from the total number of term loans disbursed, according to the officials.