The Central Government has asked public sector banks (PSBs) to develop new loan products of up to ₹1 lakh for street vendors. The move aims to help vendors gradually move from small loans under the PM SVANidhi Scheme to higher-value loans under the Pradhan Mantri Mudra Yojana (PMMY).
Under PM SVANidhi scheme, public can get loan upto Rs.10,000 initially. If the loan is repaid in time, then public can get loan upto Rs.20,000 for the second time and if they repay Rs.20,000 also on time, then they can get loan upto Rs.50,000.
So, street vendors can get maximum loan upto Rs.50,000 only. Now, the Government has asked Public Sector Banks to increase this limit to Rs.1 lac. This means that street vendors who repay Rs.50,000 on time can get loan upto Rs.1 lac and if they repay Rs.1 lac on time, then they can apply for loans upto Rs.10 lakh under Mudra Yojana.
Banks Working on New Loan Scheme
According to officials, banks are preparing a model loan scheme with relaxed eligibility conditions and a simplified credit assessment process.
A government official said that although micro-credit is already available, many street vendors are unable to move to bigger loans because there is no suitable loan product designed for them. The government has now asked banks to fill this gap with a structured loan scheme.
So far, more than 1.05 crore (10.5 million) loans have been sanctioned and Loans worth over ₹17,800 crore have been approved under the scheme.
Government Promoting Grameen Credit Score
The government has also directed banks to increase lending based on the Grameen Credit Score (GCS) and integrate it fully with the JanSamarth Portal.
In the first phase, the Grameen Credit Score has been developed using existing data such as rural and agriculture-related borrowings available with credit information companies.
The government plans to add more parameters in the future, which is expected to improve access to formal credit for first-time borrowers.
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