Pradhan Mantri SVANidhi
Also called: PM SVANidhi · Topic: Rural Credit, Microfinance and Financial Inclusion · NCERT: Beyond NCERT
Meaning
Pradhan Mantri SVANidhi (PM SVANidhi) is a central scheme that gives street vendors small loans for working capital. Working capital is the money a vendor needs for daily costs, such as buying vegetables, fruit or other goods to sell. The loans are collateral-free, so the vendor does not pledge any asset (land, gold or deposits). The scheme was launched during the COVID-19 pandemic, when lockdowns had wiped out vendors' cash. Credit comes in stages: a vendor who repays the first loan on time can get a bigger second loan, and then a bigger third one. Vendors who repay on time get an interest subsidy (the government pays part of the interest), and vendors who take digital payments get cashback. In this way, a good repayment record does the job that collateral usually does. The scheme matters because street vendors have no collateral and no salary slips, so banks rarely lend to them and they often borrow from moneylenders at very high interest.
Example
A vegetable seller in Pune takes a small SVANidhi loan to buy stock each morning. She repays in instalments on time and accepts UPI payments from customers. Because of this she gets the interest subsidy and cashback, and she qualifies for a larger second loan to buy a pushcart. She no longer has to borrow from a moneylender at 5% a month.
Don't confuse with
- Pradhan Mantri Mudra Yojana (PMMY): it gives collateral-free loans to all kinds of micro enterprises in several size categories, now up to ₹20 lakh. SVANidhi is only for street vendors and gives much smaller working-capital loans.