Monday, March 8, 2021
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Centre alerts banks on ‘slowdown’ in loans to street vendors

In a letter to public sector banks, the Ministry of Housing and Urban Affairs noted that the “sanctions and disbursements” of loans for street vendors, as part of a program put in place during the Covid lockdown -19 last year, have “slowed down”.

“It has been observed that after initial months of tremendous success, sanctions and disbursements slowed down due to a number of factors such as bank mergers, banks were concerned due to the quarter being ending in December, a very high number of requests returned by some banks and bank branches were unable to contact the street vendors, ”said the note signed Tuesday by Secretary Durga Shanker Mishra.

“As you know, the VS (street vendors) are generally not included financially and depend on credit from informal sources. In such a scenario, rejecting loan applications based on a low CIBIL score is not advisable unless the provider is a defaulting lender, ”he says.

“I urge you to design an appropriate protocol for returning claims (and) to review the guidelines for granting credit to low CIBIL vendors under this program,” the memo said.

The issue of returning loan applications was also raised during a webinar with banks on Monday.

In his memo, Mishra said the ministry would issue a separate standard operating procedure listing the responsibilities of banks and urban local governments. The ministry has also decided to organize camps in cities for the next three Saturdays, where credit institutions will set up offices while urban local communities will mobilize street vendors.

The program – PM’s street vendor AtmaNirbhar Nidhi (PM SVANidhi) – offers street vendors low-interest loans of Rs 10,000 for one year. There are plans to help daily wage workers, many of whom are migrant workers, who suffered during the lockdown.

According to recent data collected by the ministry, there are 42.7 lakh street vendors in the country, excluding West Bengal. Since the program started seven months ago, a total of 37 lakh loan applications have been received; 20 lakh were sanctioned.

Ministry sources said PSU banks accounted for 95% of sanctioned loans to date. Senior officials said the total rate of non-performing assets (NPAs) under the scheme was 7% so far.

According to ministry data, Uttar Pradesh has the highest number of street vendors (7.5 lakh), followed by Maharashtra (5.7 lakh), Telangana (5.7 lakh), Madhya Pradesh (5 lakh), Gujarat (3.6 lakh) and Andhra Pradesh (2.7 lakh).


Note: The content and images used in this article is rewritten and sourced from

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