Second Covid wave hit street vendors hard but less than 1 in 5 defaulted on relief loans
Between July 2020 and February 2023, just 17.51 per cent of the total number of loans turned bad or non-performing.
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The RTI reply showed that a total of 193 banks had disbursed a total of 41.20 lakh loans (of up to Rs 10,000 each, Rs 20,000 each and Rs.50,000 each) worth Rs 4,898.75 crore from the start of the scheme till February 10. (Express file photo) IN 2021-22, the year that started with the deadly second wave of Covid-19, street vendors who took loans of Rs 5,000-10,000 under a Central scheme, were hit the hardest, with almost half of those who borrowed defaulting on their repayment. But overall, between July 2020 and February 2023, just 17.51 per cent of the total number of loans turned bad or non-performing.
Under Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM-SVANidhi), the number of loans with the smallest ticket size of Rs 5,000-10,000 that turned non-performing or bad shot up from 3.98 per cent of the total number of loans disbursed in 2020-21 to 48.18 per cent of the total number of loans disbursed in 2021-22, government data shows. In 2022-23 (till February 10, 2023), 19.09 per cent of the total number of loans disbursed turned bad.
The data from the Union Ministry of Housing and Urban Affairs obtained by The Indian Express under the Right to Information Act shows that over three years (July 2020 till February 10, 2023), as many as 33.69 lakh loans, between Rs 5,000 and Rs 10,000 each with a one-year maturity period, and adding up to Rs 3,345 crore, were disbursed. Of these, 15.05 lakh loans have been fully repaid (see chart for year-wise data) as on February 10 this year.
According to the officials, the EMIs to be paid by the street vendors started at around Rs 934 a month, depending on the principal amount and the interest charged by banks after the government subsidy of 7 per cent. The government paid Rs 57.05 crore as interest subsidy over the three years till February 10, 2023.
El Nino effect
After four consecutive years of normal monsoon, expectations for another year of good rainfall are not high. The main reason is the possibility of El Nino. But a mild El Nino does not necessarily mean suppressed rainfall. Also, the impact of El Nino is not immediate. Development of El Nino, expected in July, is likely to have an impact only on the tail end of the monsoon season.
The Ministry did not provide data on the total value of loans which have become non-performing assets (NPAs) at the end of every year. Under the RTI, it provided data only on the percentage of loan accounts that have turned non-performing or bad in a year.
Under the PM-SVANidhi, launched in July 2020, repayment of the first term loan of Rs 5,000-10,000 in a year made a vendor eligible for the second term loan of up to Rs 20,000 to be repaid over two years. If this is also repaid in time, the vendor becomes eligible for the third term loan of up to Rs 50,000.
Bulk of PM-SVANidhi lending – Rs 3,345 crore out of total Rs 4,898.75 crore – were extended as first term loans to 33.69 lakh accounts during the three years beginning July 2020 till February 10, 2023. Lending under the second term loan totalled Rs 1,461 crore to as many as 7.32 lakh loan accounts, and Rs 94 crore under the third term loan.
According to officials, who do not wish to be named, the rate of NPAs being reported by participating banks and the spike in 2021-2022 pointed to the impact of the second wave. They said the NPA rates were calculated by deducting the number of loans repaid and those being paid in time from the total number of the term loans disbursed till then.
The RTI reply showed that a total of 193 banks had disbursed a total of 41.20 lakh loans (of up to Rs 10,000 each, Rs 20,000 each and Rs.50,000 each) worth Rs 4,898.75 crore from the start of the scheme till February 10. Public sector banks accounted for the most loans disbursed, with State Bank of India alone disbursing 12.15 lakh loans.
Once the first term loan is repaid, the vendors can avail of the second term loan of Rs 15,000 to Rs 20,000, to be repaid in two years. From the start of the second term loan from May 2021 till February 10 this year, a total of 7.32 lakh loans worth Rs 1,461 crore have been disbursed. Only 4,906 loan accounts turned bad. As many as 27,621 second term loans were fully repaid. From July 2022 onwards, a third term loan of Rs 30,000 to Rs 50,000 was started for those who repay the second term loan. Till February 10 this year, 18,890 third term loans worth Rs 94 crore have been disbursed, as per the RTI reply.
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