In a letter to public sector banks, the Ministry of Housing and Urban Affairs has noted that “sanctions and disbursements” of loans for street vendors, as part of a scheme instituted during the Covid-19 lockdown last year, have “slowed down”.
According to ministry data, Uttar Pradesh has the highest number of street vendors (7.5 lakh), followed by Maharashtra (5.7 lakh), Telangana (5.7 lakh), Madhya Pradesh (5 lakh), Gujarat (3.6 lakh), and Andhra Pradesh (2.7 lakh).
In a letter to public sector banks, the Ministry of Housing and Urban Affairs has noted that “sanctions and disbursements” of loans for street vendors, as part of a scheme instituted during the Covid-19 lockdown last year, have “slowed down”.
“It has been observed that after initial months of tremendous success, the sanctions and disbursements have slowed down owing to a number of factors like a merger of banks, banks getting pre-occupied due to quarter ending in December, very high number of applications returned by certain banks and bank branches unable to contact the street vendors,” says the note signed by Secretary Durga Shanker Mishra on Tuesday.
“As you are aware, the SVs (street vendors) generally, are financially not included and rely on credit from informal sources. In such a scenario, rejection of loan applications based on low CIBIL score is not advisable, unless the vendor is a loan defaulter,” it says.
“I would urge you to devise a suitable protocol for return of applications (and) review the guidelines for extending credit to vendors having low CIBIL score under this scheme,” says the note.
The issue of loan applications being returned was also raised at a webinar with the banks on Monday.
In his note, Mishra has said the ministry will issue a separate SOP (standard operating procedure) listing the responsibilities of banks and urban local bodies. The ministry has also decided to hold camps in cities for the next three Saturdays, where lending institutions will set up desks while urban local bodies will mobilise street vendors.
The scheme — PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) — offers street vendors collateral-free, low-interest loans of Rs 10,000 for a year. It was envisioned to help daily wage workers, many of them migrant laborers, who suffered during the lockdown.
According to recent data collected by the ministry, there are 42.7 lakh street vendors in the country, excluding West Bengal. Ever since the scheme was launched seven months ago, a total of 37 lakh loan applications have been received; 20 lakh have been sanctioned.
Sources in the ministry said PSU banks account for 95 percent of the loans sanctioned so far. Senior officials said the total non-performing asset (NPA) rate under the scheme was 7 percent so far.
According to ministry data, Uttar Pradesh has the highest number of street vendors (7.5 lakh), followed by Maharashtra (5.7 lakh), Telangana (5.7 lakh), Madhya Pradesh (5 lakh), Gujarat (3.6 lakh) and Andhra Pradesh (2.7 lakh).
