UP tops in disbursing vendor loans; Bengal, Kerala lowest

Even as several state governments and their local administrations are pushing the PMSVANidhi Yojana, the Centre’s micro-credit scheme for urban street vendors, there are stark differences in the pace of implementation of the scheme across states.

While Uttar Pradesh has disbursed over 3.5 lakh loans, and Telangana and Madhya Pradesh have given out over 2 lakh loans each over the past seven months, West Bengal, Assam, and Kerala have disbursed only a small fraction of those numbers.

The PM Street Vendors’ Atmanirbhar Nidhi (PMSVANidhi) scheme, launched in June 2020 amid the Covid-19 pandemic, provides street vendors collateral-free loans of Rs 10,000 at concessional rates. All vendors who have been vending since March 24, 2020, and have a certificate of vending, can avail of the loan.

UP tops the implementation list, with banks in the state having disbursed loans aggregating to Rs 347.4 crore to 3.54 lakh individuals as of January 20.

West Bengal sits at the bottom of the list – a mere Rs 9 lakh has been disbursed during this period under the scheme to just 95 individuals across the state, data on the PMSVANidhi website show. The disbursal numbers in West Bengal are lower than states that are far smaller in area and population, such as Tripura, Mizoram, and Goa.

Kerala is among the worst performers, the data show. It has so far disbursed a total Rs 6.09 crore to 6,144 individuals, scoring above only West Bengal and Assam among the bigger states.

The best performing states after UP are Telangana (2,39,525 loans aggregating to Rs 233.6 cr) and Madhya Pradesh (2,28,535 loans; Rs 226.7 crore). Maharashtra, Gujarat, Karnataka, and Andhra Pradesh have disbursed over Rs 50 crore each under the scheme.

According to bankers, urban local bodies (ULBs) and town vending committees are responsible for identifying eligible borrowers and issuing them certificates of vending, identity cards and letters of recommendation – the onus for making the scheme successful, therefore, lies with them.

If ULBs do not recommend lists of beneficiaries to banks, bank branches will not be able to execute the scheme, a banker in the private sector said. “So states where ULBs are pushing the scheme have seen more beneficiaries and higher disbursements from banks,” said the official, who declined to be identified.

Asked about the extremely low numbers in West Bengal, the State Urban Development Agency (SUDA), which plays a key role in accepting applications, said it was on account of delay in approval of the scheme in the state.

“The scheme was approved by the state government six months after it was launched, and only after its approval in January were applications sponsored,” a SUDA official said on condition of anonymity.

The state Urban Development and Municipal Affairs Minister Firhad Hakim, however, said there was no interest in the scheme from street vendors, who had already benefitted from grants by the state government.

“We gave Rs 2,000 directly to street vendors, whereas the central government is giving them a loan. There was no delay from our side,” Hakim said.

Another SUDA member said that the weak numbers in West Bengal reflect the tensions between Centre and the state.

“The state government for obvious reasons didn’t sponsor the applications, and accordingly the number of applications was low.” However, the SUDA member said, “The issue between the Centre and the state has now been resolved.”

Ashwin Kumar Jha, convener of the State Level Bankers Committee (SLBC) in West Bengal, said the number of applications was now rising, and sanction and disbursement amounts were expected to increase soon. “There will be more sanctioned applications, since bankers have assured that applications will be treated on priority,” Jha said.

On the low numbers in Kerala, a senior SLBC official said the union government aimed to take the scheme to 1 lakh vendors, but the state has only 24,000 registered street vendors.

“There are a few factors for the poor off-take under PMSVANidhi. We are not getting enough applications despite good campaigning by banks. A section of street vendors feels the amount is too small for resuming business. Many vendors are waiting to resume business first, otherwise they fear that they would default on repayment,’’ the official said.

Under the scheme, vendors can avail a working capital loan repayable in monthly instalments in one year. While SBI charges interest at 7.25 per cent, the scheme offers an interest subsidy of 7 per cent on timely/early repayment of the loan. However, despite the interest subvention, many loan accounts under the scheme have turned NPAs.

Inputs from Sweety Kumari and Shaju Philip