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February 25, 2021

News at Another Perspective

Centre alerts banks on ‘slowdown’ in loans to road distributors

2 min read
loans to street vendors, public sector banks, Banking sector, slowdown in loans, Covid lockdown, Indian express news


In a letter to , the Ministry of Housing and Urban Affairs has famous that “sanctions and disbursements” of loans for road distributors, as a part of a scheme instituted through the Covid-19 lockdown final 12 months, have “slowed down”.
“It has been observed that after initial months of tremendous success, the sanctions and disbursements have slowed down owing to a number of factors like merger of banks, banks getting pre-occupied due to quarter ending in December, very high number of applications returned by certain banks and bank branches unable to contact the street vendors,” says the be aware signed by Secretary Durga Shanker Mishra on Tuesday.
“As you are aware, the SVs (street vendors) generally, are financially not included and rely on credit from informal sources. In such a scenario, rejection of loan applications based on low CIBIL score is not advisable, unless the vendor is a loan defaulter,” it says.

“I would urge you to devise a suitable protocol for return of applications (and) review the guidelines for extending credit to vendors having low CIBIL score under this scheme,” says the be aware.
The challenge of mortgage functions being returned was additionally raised at a webinar with the banks on Monday.
In his be aware, Mishra has mentioned the ministry will challenge a separate SOP (normal working process) itemizing the obligations of banks and concrete native our bodies. The ministry has additionally determined to carry camps in cities for the following three Saturdays, the place lending establishments will arrange desks whereas city native our bodies will mobilise road distributors.
The scheme — PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) — affords road distributors collateral-free, low-interest loans of Rs 10,000 for a 12 months. It was envisioned to assist every day wage staff, lots of them migrant laborers, who suffered through the lockdown.
According to current information collected by the ministry, there are 42.7 lakh road distributors within the nation, excluding West Bengal. Ever because the scheme was launched seven months in the past, a complete of 37 lakh mortgage functions have been obtained; 20 lakh have been sanctioned.
Sources within the ministry mentioned PSU banks account for 95 per cent of the loans sanctioned up to now. Senior officers mentioned the full non-performing asset (NPA) price beneath the scheme was 7 per cent up to now.

According to ministry information, Uttar Pradesh has the best variety of road distributors (7.5 lakh), adopted by Maharashtra (5.7 lakh), Telangana (5.7 lakh), Madhya Pradesh (5 lakh), Gujarat (3.6 lakh) and Andhra Pradesh (2.7 lakh).