Representational image. | A street vendor in Delhi. | Photo: Flickr/Adam Cohn
Representational image. | A street vendor in Delhi. | Photo: Flickr/Adam Cohn


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New Delhi: Private banks have been shying away from disbursing loans to street vendors, data available with the Ministry of Housing and Urban Affairs shows, 10 months after the Prime Minister Street Vendor’s Atma Nirbhar Nidhi scheme was launched to provide micro-credit facility to vendors reeling under the impact of Covid-19 lockdown.

Under the PM SVANidhi scheme, street vendors can avail collateral-free working capital loans up to Rs 10,000 of 1 year tenure. An interest subsidy at 7 per cent per annum is credited to the street vendor’s account on timely early repayment.

The housing ministry plans to provide such loans to about 50 lakh street vendors across the country, who have been affected due to lockdowns, to restart their business.

However, ministry data accessed by ThePrint shows a lopsided participation among public and private banks in disbursing loans so far.

Private banks disbursed loans to just 32,534 street vendors

Until 3 April, of the 41.21 lakh street vendors who have applied under the scheme, loans amounting to Rs 1,983 crore have been disbursed to 20 lakh street vendors, according to ministry data.

Of this, public sector banks disbursed loans to 18 lakh beneficiaries (90 per cent) until 29 March. Private sector banks distributed loans to just 32,534 beneficiaries — 1.6 per cent of the total.

Even regional rural banks have disbursed loans to far higher numbers of street vendors — 1.11 lakh beneficiaries. Cooperative banks have provided loans to 29,396 street vendors.

Among the public sector banks, State Bank of India (SBI) tops the list, disbursing loans to 5.8 lakh applicants, followed by Union Bank of India and Bank of Baroda, which gave loans to 2.32 lakh and 1.99 lakh applicants, respectively.

Jammu and Kashmir Bank Ltd is the largest contributor among private banks, disbursing loans to 9,595 applicants until 29 March. IDBI Bank is next in line, disbursing loans to 7,287 applicants followed by Karnataka Bank Ltd, which gave loans to 6,138 applicants.


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What officials say on poor show

Speaking about the reluctance among private banks in disbursing loans to street vendors, a senior ministry official said fear of collateral-free loan turning into non-performing assets (NPA) is a key reason for their poor show.

“Private banks have been reluctant. We have had several meetings with private bank operators to be more proactive. They give various reasons including fear of the collateral free loan turning into non-performing assets, getting lesser number of applicants, etc.,” said the official who didn’t want to be named.

“One of the reasons private banks have been citing for the low disbursement of loan is that unlike private sector banks very few street vendors have accounts in private banks. And private banks are not the first choice for street vendors when it comes to opening a new account. Without a bank account, disbursal of loans automatically gets affected,” a second ministry official said on condition of anonymity.

Concern shown by parliamentary panel

Last month, a parliamentary panel had also expressed concern over the poor participation of private banks in the PM SVAnidhi scheme.

In a report tabled in the Parliament, the Standing Committee on Urban Development headed by BJP MP Jagdambika Pal said that as of 16 February, over 37.3 lakh applications had been received under the scheme but there was a huge gap between participation of banks in private and public sector.

The share of private sector banks was a mere 4 per cent approximately, the committee noted.

In its report, the panel said, “…private sector banks are also partners in development and as they are given equal rights in handling government business vis-a-vis their counterparts in public sector, the private sector banks must come forward to participate in the scheme in true spirit and become active partners in government’s efforts to bring the street vendors into the formal financial system.”

It also expressed concern over the insistence of both public and private sector banks on insistence of high credit rating of the street vendors.

“The committee express their concern at the insistence of credit rating/history of the street vendors as they feel substantial majority of the street vendors are yet to have the access to the formal financial system and perhaps many street vendors may not even have approached banks for loans in the past, let alone having high credit rating,” the report said.

The committee also called on the housing ministry to pursue the Ministry of Finance and Reserve Bank of India seeking relaxation on insistence on CIBIL score (consumer credit score) of the street vendors.

According to the ministry data, among the states and UTs, Uttar Pradesh has disbursed loans to the maximum number (5.55 lakh) of loans to street vendors followed by Madhya Pradesh (3.09 lakh) and Telangana (3.04 lakh). Among the sections of vendors, fruit and vegetable sellers accounted for 45 per cent of total beneficiaries, followed by hawkers selling fast food (21 per cent) and hawkers selling cloth and handloom material (13 per cent).


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