Almost 16% beneficiaries of PMSvanidhi loans disbursed till May 2022 have defaulted on repayment

Two years since the inception of the PM Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi) scheme, data has revealed that 15.88% of the loans disbursed till May 2022 have become non-performing assets

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Representative
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Ashlin Mathew

Two years since the inception of the PM Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi) scheme, data has revealed that 15.88% of the loans disbursed till May 2022 have become non-performing assets (NPAs), where Uttar Pradesh reported the largest number (1.85 lakhs) of NPAs followed by Madhya Pradesh (95,807) – both BJP-ruled states.

In the aftermath of the ill-timed Covid-19 lockdown in March 2020, the union government had launched the PMSVANidhi scheme to provide a loan to street vendors to resume their livelihoods which had been adversely impacted. Initially conceived for only two years, it has been extended for the third year with a budgetary allocation of Rs 150 crore.

The scheme intended to provide collateral-free loans at subsidised interest rates to eligible street vendors in three tranches- Rs 10,000 in the first year, Rs 20,000 in the second year and Rs 50,000 in the third year. Only those who pay the first tranche of Rs 10,000 are eligible for the next loan.

According to data provided by the Ministry of Housing and Urban Affairs under the RTI Act, 5.12 lakh PMSVANidhi loans have become NPAs. This amounts to 15.88% of the loans disbursed until the date of the RTI application. A total of 48.70 lakh applications were received for the first and second loans across the country since the inception of the scheme. The RTI application was filed by Venkatesh Nayak of Commonwealth Human Rights Initiative (CHRI).

However, early this month the Housing and Urban Affairs minister Hardeep Puri claimed that only 12-13% of the loans disbursed under the scheme have become NPAs. After UP and MP, Telangana (55,763), Maharashtra (36,130) and Karnataka (28,516) reported higher number of NPAs. Gujarat reported 20,084 NPAs, followed by Tamil Nadu (18,689), Andhra Pradesh (13,628) and Chhattisgarh (10,824).

Vice-Chancellor of Dr BR Ambedkar School of Economics University NR Bhanumurthy underscored that it is too early to call these NPAs. “This is the first time that a public policy has been brought out focussing on this segment of the population. When the government decided to address the issues of this cohort there was no data available. Although the scheme was announced in 2020, banks would have taken their own time to begin disbursing loans to the beneficiaries. And even banks term loans as NPAs after three years,” explained Bhanumurthy.


The government should have been expecting NPAs in this case, believes human development economist Santosh Mehrotra, because in an economy which was doing badly, the government had decided to offer collateral free loans instead of providing income support.

“The government’s approach of relieving financial distress of people as a result of the lockdown which was imposed in an unplanned manner has been very cavalier. The government knew they have bankrupted the treasury, so they decided to go the other route – through the banks to spread largesse,” added Mehrotra, who is also the Centre of Labour chair at the Jawaharlal Nehru University.

Though the ministry had stated that they had intended to cover 50.47 lakh street vendors under the scheme, data from June 2022 showed that only 29.91 lakh availed the first loan. This amounts to 59.26% of the target set by Ministry of Housing and Urban Affairs (MoHUA). Only 6.48 lakh applications were received for the second loan as only those who have successfully paid their first loan can get the second tranche. To put it in perspective, only 7.87% of the beneficiaries who had received the first loan also received the second loan under PMSVANidhi.

There is a huge risk in terms of getting these loans back, observed Bhanumurthy as it has been seen with regard to what happens to corporate, agriculture and MSME loans. Additionally, the repayment culture has already been affected over years because of the political interventions and loan waivers.

Interestingly, some states reported a much higher disbursal rate for the first tranche loans than the actual number of applicants. In Telangana, only 5,206 women street vendors applied for the first loan, but 21,251 women beneficiaries (408.20% increase) were reported during the same period. Similarly, UP reported only 51,586 women street vendor applicants but 82,159 first loans were disbursed.

The RTI data revealed that Uttar Pradesh (UP) topped the list of states with the highest number (8.71 lakh) of disbursals (first and second loans) between financial years 2020-21 and 2022-23. Madhya Pradesh was second on the list with 5.20 lakh loan disbursals. This was followed by Telangana with 4.01 lakh disbursals, Gujarat with 2.18 lakh and Maharashtra with 2.12 lakh.

The two states of Uttar Pradesh and Madhya Pradesh accounted for more than a third (35.72%) of the total number of first loan applications received. Andhra Pradesh, Tamil Nadu, Karnataka, Telangana and Kerala along with the Union Territory of Puducherry – all south Indian states – accounted for 28.66% of the first loan applications. The remaining States and UTs contributed to the rest of the total.

In case of the second loan applications, Telangana topped the list with 1.31 applications, followed by Uttar Pradesh (1.10 lakh), Madhya Pradesh (1.02 lakh) and Andhra Pradesh (53,101). The South Indian states of Telangana, Tamil Nadu, Andhra Pradesh, Karnataka and Kerala and Puducherry accounted for 39.80% of the total second loan applications received. UP and MP accounted for 32.73% of the total second loan applications received. The remaining states and UTs contributed to the balance figure.

However, a study conducted in 2021 by the Delhi-based Indo Global Social Service Society (IGSSS) estimated that there were more than two crore street vendors in the entire country. They represent 4% of the urban workforce across India and have a parallel turnover of Rs 80 crore a day.

The IGSSS study had revealed that 40% of all the respondents were not aware of the PM SVANidhi loan scheme and 51% hadn’t applied for a loan under the PM SVANidhi scheme as many were worried they wouldn’t able to repay the loan.

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