The industry body for micro-finance institutions, Sa-Dhan, has requested Finance Minister Nirmala Sitharaman to set up a dedicated fund for loans to street vendors under the MUDRA scheme.
The Finance Ministry had announced a scheme for street vendors that proposes bank credit facility for initial working capital up to ₹10,000 for each vendor. This scheme will cover urban as well as rural vendors doing business in the adjoining urban areas.
In a letter to the Finance Minister, P. Satish, executive director, Sa-Dhan, said while the micro-finance sector was geared up to implement the scheme, it was hampered by lack of liquidity, which was further extenuated by the non-extension of moratorium on loans to these institutions by some banks and DFIs such as SIDBI and MUDRA.
“With a view to ensuring timely roll-out of the scheme of Special Credit Facility to Street Vendors, we request [Finance Minister] to direct the setting up of a dedicated fund of ₹3,000 crore in MUDRA. This special fund can be carved out of resources already available with MUDRA,” the letter said.
“This fund should be utilised by MUDRA to extend finance to MFIs of all types [NBFC-MFIs as well as non-NBFC-MFIs] in a time-bound manner, who, in turn, would lend to street vendors starting with an initial loan amount of ₹10,000 per head,” it said.
Mr. Satish highlighted that 45% of the borrowers of MFIs were from urban and semi-urban areas, which worked out to about 20.46 million, of which nearly 31% were street vendors. These include vegetable, fruit and flower vendors, push cart vendors, and temporary stand vendors.
Sa-Dhan has already initiated discussions with DAY-NULM, Ministry of Housing and Urban Affairs to operationalise the scheme.