PM SVANidhi Scheme: ₹120 crore to be returned to street vendors; loans available at 14% interest..

The Madhya Pradesh government has taken a major decision for street vendors associated with Prime Minister Modi's PM SVANidhi scheme. Now, beneficiaries under this scheme will receive loans at a maximum interest rate of 14 percent. Additionally, those from whom banks had already deducted interest will have that amount refunded.

According to the Urban Administration and Development Department, this interest refund will amount to approximately ₹120 crore. The government believes that this step will restore public confidence in the PM SVANidhi scheme and provide relief to small traders who have been under financial pressure since the COVID-19 pandemic.

What is the PM SVANidhi Scheme?
The Pradhan Mantri Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi) scheme was launched to provide collateral-free loans to small street vendors to help them restart their businesses. Under the scheme, the central government provides a 7 percent interest subsidy, and the state government bears the remaining interest burden. This means the applicant does not have to pay any interest. However, many banks did not follow the rules and deducted the interest amount at the time of loan disbursement, resulting in beneficiaries receiving less money.

How much loan is available under the scheme?
Under the PM SVANidhi scheme, a beneficiary receives a loan of up to ₹10,000 for the first time. If the principal amount of the loan is repaid within three months, they can avail a loan of up to ₹20,000 the next time. After repaying the second loan, they can get a loan of up to ₹50,000 for the third time.

Approval sought from the Centre
Due to this discrepancy, many street vendors were becoming disillusioned with the scheme. It also came to light that some banks were charging more than 20 percent, even up to 25 percent interest. This was causing people to shy away from the scheme. Following this, the state government wrote to the central government requesting a cap on the interest rate.

The loan amount under the scheme has also been increased.
After receiving the Centre's approval, it has now been clarified that no bank will be able to charge more than 14 percent interest under the PM SVANidhi scheme, and beneficiaries will receive the full loan amount. The interest amount already deducted will also be refunded. In addition, to further improve the scheme, the loan amount has been increased, and those who repay on time will receive benefits such as higher loan amounts, cashback, and credit cards in the future. The government says that these changes will eliminate the double burden on street vendors and allow them to avail of the scheme without fear.

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