PM-SVANidhi (PM Street Vendor’s Atmanirbhar Nidhi) is a micro-credit scheme launched by the Ministry of Housing and Urban Affairs, Government of India for street vendors on 1 June 2020. It has since then helped promote ‘inclusive entrepreneurship’ and proven to be a gender equalizer.

The scheme provides collateral free loans up to Rs 50,000 for eligible street vendors in incremental tranches. It provides loans in three tranches – 1st tranche of Rs 10,000, 2nd tranche of Rs 20,000 subject to repayment of the 1st of tranche, and 3rd tranche of Rs 50,000 upon repayment of the second loan.

A recent study by SBI titled “PM SVANidhi: Strengthening Country’s Social Fabric by Empowering Grassroot Market Mavericks” has hailed the performance of the scheme stating that 43% beneficiaries are women street vendors.  Moreover 44% of the PM SVANidhi beneficiaries belong to OBC category, while Scheduled Castes and Scheduled Tribes account for 22%.

Sharing the report on his blog, Prime Minister Narendra Modi has hailed the transformative nature of the scheme.  He said “this in-depth research by Soumya Kanti Ghosh of the State Bank of India provides a very clear picture of the transformative impact of PM SVANidhi. It notes the inclusive nature of this scheme and highlights how it has led to financial empowerment of the marginalized”.

Under the scheme, regular repayments are incentivized with a 7 per cent interest subsidy, and digital transactions are rewarded with cashback up to ₹1,200 per year.

As per the dashboard of the PM-SVANidhi scheme, as on October 26, 2023, 57.20 lakh loans have been sanctioned as 1st tranche, 15.92 lakh as 2nd tranche and 1.94 lakh as 3rd tranche.

As per the report, the ratio of people repaying first loan of Rs 10,000 and taking the second loan of Rs 20,000 loan is 68%.  Similarly, the ratio of people repaying second loan of Rs 20,000 and taking the third loan of Rs 50,000 loan is 75%, suggesting the financial discipline among the small and marginal street vendors. Till date the Banks have disbursed Rs 9,152 crore loans under the scheme

Public Sector Banks (PSBs) have taken the lead in sanctioning loans.  Among the PSBs, the State Bank of India (SBI) has disbursed 31% of the total loans under this scheme, followed by Bank of Baroda (31%), Union Bank of India (10%), and Punjab National Bank (8%) respectively.

As per PM SVANidhi dashboard, around 5.9 lakh borrowers are in 6 mega cities and 7.8 lakh borrowers come from top 10 million+ population cities.  Among the cities, Ahmedabad has the highest number of PM SVANidhi account holders at 1,37,516, closely followed by Lucknow (1,35,581), Indore (112,015), Kanpur (109,952) and Mumbai (99,209).  In terms of percentage of active spenders, Varanasi is the top performer where 45% of total spenders are active, followed by Bengaluru (31%), Chennai (30%) and Prayagraj (30%).

Following are some notable results of the research –

PM SVANidhi has Ensured Inclusive Entrepreneurship:

• PM SVANidhi has seamlessly connected marginalized urban micro-entrepreneurs, breaking down community barriers along the way.
• The report says: “Almost 75% loan beneficiaries come from non-general category, a testament of the innate power of well-intended policy schemes to seed transformative changes.”
• OBCs account for 44% of total disbursement, while SCs/STs account for 22%
• 43% of the total beneficiaries are women. The report says: “female share indicates empowerment of entrepreneurial capabilities of urban female, giving SVANidhi a gender equalizer tag.”

Increasing Persistency Ratio (2nd loan/1st loan repaid):

• The report says: The persistency ratio (2nd loan/1st loan repaid) is increasing indicating need and popularity of PM SVANidhi Scheme and also incentivizing those who are paying back the loan in terms of further loans are acting as a better conduit.
• Under the scheme regular repayments are incentivized with a 7% interest subsidy and digital transactions are rewarded with cashback up to Rs 1,200 per year.
• Till date around 70 lakh loans disbursed in all three tranches, benefiting over 53 lakh street vendors, with a total value exceeding Rs 9,100 crore

Fifty Percent Increase in Average Consumption of PM SVANidhi account holders:

• Income has been the key driver of private consumption and increase in income reflects an increase in consumption/spending.
• The report says that, PM SVANidhi, with an objective of economic upliftment, is a huge success in this matter. The researchers believe that a small loan of Rs 10,000 onwards helps in a great manner to PM SVANidhi account holders.
• According to the report: “The average debit card spending of PM SVANidhi account holders increased by 50% to Rs 80,000 in FY23 as compared to FY21.”
• In just 2 years average spending per annum increased by Rs 28,000, with a rather small amount of seed capital infused to informal urban entrepreneurs

Two-third of the borrowers are in the range of 26-45 years:

• 65% of the borrowers in PM SVANidhi are in the age-group of 26-45.
• On an average, 63% of those below the age 25 and above 60 age groups spend more post disbursement of loan.

Jan Dhan has Linked the Unbanked Ones with the Banks. PM SVANidhi has Linked the Unloaned Ones with the Loans:

• Considering SVANidhi as a means of access to credit for the Jan Dhan people, the SBI research looked into the effect of SVANidhi loans on the spending of Jan Dhan beneficiaries.
• It has been estimated that SVANidhi loan given in FY22 to the PMJDY beneficiaries has increased their spending/Treatment Group at merchant outlets on an average by at least Rs 1385, in comparison to PMJDY beneficiaries who have not got the SVANidhi Loans /Control Group.

Behavioral Shift for Digital Acceptability:

PM SVANidhi has increased acceptability of digital transactions. PM SVANidhi loans when given to Jan Dhan beneficiaries, migrates at least 9.5% people who were doing less than 10 transactions into higher digital transactions.

PM SVANidhi account holders in Mega & Million+ Cities:

• Of these mega and million+ cities, Varanasi is the top performer where 45% of total spenders are active spenders, followed by Bengaluru, Chennai, Prayagraj, etc.