PM SVANidhi Scheme, launched by Modi government in 2020, is a micro credit scheme, for urban street vendors, which provides collateral-free loans up to Rs 50,000. A recent research work by SBI titled PM SVANidhi: Strengthening Country’s Social Fabric through empowering grassroot market mavericks has analysed the transformative impact of PM SVANidhi. This note mentions some notable results of the research.

PM SVANidhi has Ensured Inclusive Entrepreneurship:

• PM SVANidhi has seamlessly connected marginalized urban micro-entrepreneurs, breaking down community barriers along the way.

• The report says: "Almost 75% loan beneficiaries come from non-general category, a testament of the innate power of well-intended policy schemes to seed transformative changes.”

OBCs account for 44% of total disbursement, while SCs/STs account for 22%

43% of the total beneficiaries are women. The report says: “female share indicates empowerment of entrepreneurial capabilities of urban female, giving SVANidhi a gender equalizer tag.”

Increasing Persistency Ratio(2nd loan/1st loan repaid):

The report says: The persistency ratio (2 nd loan/1 st loan repaid) is increasing indicating need and popularity of PM SVANidhi Scheme and also incentivizing those who are paying back the loan in terms of further loans are acting as a better conduit.

Under the scheme regular repayments are incentivized with a 7% interest subsidy and digital transactions are rewarded with cashback up to Rs 1,200 per year.

• The ratio of people repaying first loan of Rs 10,000 and taking the second loan of Rs 20,000 loan is 68%.

• The ratio of people repaying second loan of Rs 20000 and taking the third loan of Rs 50,000 loan is 75%.

Till date around 70 lakh loans disbursed in all three tranches, benefiting over 53 lakh street vendors, with a total value exceeding Rs
9,100 crore

Fifty Percent Increase in Average Consumption of PM SVANidhi account holders:

Income has been the key driver of private consumption and increase in income reflects an increase in consumption/spending.

• The report says that, PM SVANidhi, with an objective of economic upliftment, is a huge success in this matter. The researchers believe that a small loan of Rs 10,000 onwards helps in a great manner to PM SVANidhi account holders.

According to the report: “The average debit card spending of PM SVANidhi account holders increased by 50% to Rs 80,000 in FY23 as compared to FY21.

• In just 2 years average spending per annum increased by Rs 28,000, with a rather small amount of seed capital infused to informal urban entrepreneurs

Two-third of the borrowers are in the range of 26-45 years:

• 65% of the borrowers in PM SVANidhi are in the age-group of 26-45.

• O
n an average, 63% of those below the age 25 and above 60 age groups spend more post disbursement of loan.

Jan Dhan has Linked the Unbanked Ones with the Banks. PM SVANidhi has Linked the Unloaned Ones with the Loans:

Considering SVANidhi as a means of access to credit for the Jan Dhan people, the SBI research looked into the effect of SVANidhi loans on the spending of Jan Dhan beneficiaries.

• It has been estimated that SVANidhi loan given in FY22 to the PMJDY beneficiaries has increased their spending/Treatment Group at merchant outlets on an average by at least Rs 1385, in comparison to PMJDY beneficiaries who have not got the SVANidhi Loans /Control Group.

Spending Avenues of Pure Jan Dhan Accounts are majorly towards basics, while Jan Dhan with PM SVANidhi account holders are found to be spending more on consumeristic avenues.This is an evidence of marginalized people getting aboard mainstream bandwagon in terms of spending patterns/preferences.

• Behavioral Shift for Digital Acceptability: PM SVANidhi has increased acceptability of digital transactions. PM SVANidhi loans when given to Jan Dhan beneficiaries, migrates at least 9.5% people who were doing less than 10 transactions into higher digital transactions.

PM SVANidhi account holders in Mega & Million+ Cities:

As per PM SVANidhi dashboard, around 5.9 lakh borrowers are in 6 mega cities and 7.8 lakh borrowers come from top 10 million+ population cities.

Of these mega and million+ cities, Varanasi is the top performer where 45% of total spenders are active spenders, followed by Bengaluru, Chennai, Prayagraj, etc.

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