As the nationwide lockdown was imposed in March 2020 and several migrant workers were stranded without any source of income, the Ministry of Housing and Urban Affairs launched the Prime Minister’s AmtaNirbhar Nidhi (PM SVANidhi) program on June 1, 2020. ).
What is the SVANidhi program?
The scheme aims to facilitate unsecured working capital loans of up to Rs. to restart their business.
It also provides incentives in the form of an interest subsidy of 7% per year on regular loan repayment. For the purpose of administering the program, an end-to-end solution through an IT platform has been developed in collaboration with the Small Industries Development Bank of India (SIDBI), which is the implementing partner of the program.
Processing of loans under the program began on July 2, 2020.
Interest rates offered by banks to qualify for a loan under the program
As of February 16, 2021, over 37.3 lakh applications have been received under this scheme. Of these, over 19.6 lakh of loans were sanctioned and over 14.6 lakh of loans were disbursed.
However, the interest rates on loans to street vendors offered by some large public sector banks to benefit from the SVANidhi scheme are quite high.
The country’s largest lender, the State Bank of India, is offering an interest rate of 9.9% under the scheme. Union Bank of India gives 7.3% interest rate, UCO Bank gives 8.5%, while Indian Overseas Bank offers 8.1% interest rate. The Punjab National Bank interest rate is slightly lower at 6.9%.
However Indian Bank and Bank of Baroda are the two banks that offer the highest interest rates at 13.5% and 12.7% respectively.
Insistence on the credit rating of the beneficiaries by the banks
While several public banks have quite high interest rates for SVANidhi beneficiaries, many of them also stress the credit rating of those seeking loans. Interestingly, the majority of street vendors do not even have bank accounts or are part of the formal financial system.
State Bank of India, Punjab National Bank and Bank of Baroda insist on a minimum credit score of 650 and above. Banks like UCO and Indian Overseas Bank don’t insist on credit score at all and the others like Indian Bank and Canara Bank though they don’t insist on credit score but check their background of credit (of street vendors) to see if they are in default or not, before offering loans.