The coronavirus outbreak in India caused an economic imbalance all across the country. It caused thousands of individuals to lose their jobs, with the unorganised business sector being among the hardest hit in the lockdown as a sizable portion of the population works as street vendors. The central government introduced the PM SVANidhi Scheme for collateral-free loans to help this segment. The plan was first launched in 2020. Under this program, the government offers unsecured loans, ranging from Rs 10,000 to Rs 50,000, to street vendors.
No guarantee is needed to request a loan through the “PM Svanidhi Yojana.” Street vendors are provided with this collateral-free loan so they can keep running their businesses. However, the person must have an Aadhaar Card and a valid active bank account to apply for the loan.
For the first time, individuals can apply for a loan of Rs 10,000 for one year. If the person repays this debt in a year, they will be given a second loan of 20,000. At the same time, the street vendors are also allowed to get a third unguaranteed loan of up to Rs 50,000. Seven percent rate interest will have to be paid on this loan. Additionally, people can get an interest subsidy if they complete their monthly payments digitally. In this scenario, the loan will become interest-free because of the subsidies and rebates.
Steps to apply for loans through PM SVANidhi Scheme:
- Visit the nearby branch of any government bank.
- Fill in the S Loan Application and submit it along with a copy of the Aadhaar Card.
- Once the loan gets approved, the requested sum will be transferred to the bank account immediately.
The government wants to boost the first loan amount from Rs 10,000 to Rs 20,000. In 2020, banks provided over 20 lakh borrowers with loans totalling Rs 10,000 while 9 lakh individuals received loans in 2021. Up till September 2022, 2 lakh individuals have acquired loans through this scheme. If the government raises the loan amount, street sellers will receive Rs 20,000 rather than Rs 10,000 when requesting a loan for the first time.