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LATEST NEWS UPDATES | Banks red-flag: Loans to street vendors in pandemic turning NPAs -Sandeep Singh and Sunny Verma

Banks red-flag: Loans to street vendors in pandemic turning NPAs -Sandeep Singh and Sunny Verma

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published Published on Jan 21, 2021   modified Modified on Jan 21, 2021

-The Indian Express

Launched in June to help vendors amid the pandemic, the PM SVANidhi scheme is a micro-credit facility that provides street vendors a collateral-free loan of Rs 10,000 at concessional rates of an estimated 7.25%.

After being nudged by municipalities to step up loan disbursements under the PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) programme, banks are writing back to report that many of these collateral-free loans are turning into non-performing assets (NPAs). Some banks are asking local authorities — who pushed for these loans — to help recover them.

Launched in June to help vendors amid the pandemic, the PM SVANidhi scheme is a micro-credit facility that provides street vendors a collateral-free loan of Rs 10,000 at concessional rates of an estimated 7.25%.

On timely or early repayment of the loan, an interest subsidy at 7% per annum is credited to the bank accounts of beneficiaries through Direct Benefit Transfer on a six-monthly basis.

Despite this interest subvention – making this an effectively interest-free loan — many accounts have turned NPAs.

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The Indian Express, 21 January, 2021, https://indianexpress.com/article/business/economy/banks-red-flag-loans-to-street-vendors-in-pandemic-turning-npas-7155136/


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