Financial Inclusion of street vendors Promotion of Micro

Financial Inclusion of street vendors – Promotion of Micro Enterprises State Bank Of India

Financial Inclusion Stated as “ Financially including persons from all strata into the mainstream banking system. Financial inclusion index was launched in 2018 based on four dimensions—branch penetration, deposit penetration, credit penetration and insurance penetration. The index will have three measurement dimensions; (i) Access to financial services (ii) Usage of financial services and (iii) Quality. The Digital India initiative, payments banks and small finance banks are playing a pivot role along with banks in bridging the financial gap

Finance to Street Vendors • Mostly rely on personal savings to invest in their personal, social and professional areas • Work on turnover basis and often avail recourse to high interest loans from non-institutional lenders • High repayment capacity but absence of Collateral and firm domiciliary status restrict institutional credit

Challenges associated with Financial Inclusion of Street Vendors ü Lack of KYC documents ü Lack of Financial literacy ü Lack of regular Substantial income (Uncertainty) ü Low level of savings ü Lack of financial accessibility ü Unable to provide security against Credit

Prospective Solutions For Vendors: For Government: For Banks: • Development of saving habit • Financial literacy • Basic accounting of receivables and sales • Provide legal status by issuing license and providing hawking zones • Include vendors in City and Town plans • Set up Social Security fund for street vendors • Designing innovative Digital lending process • Creation of focused products • Emphasis to extend more finance to these vendors under MUDRA Scheme

• MUDRA: Development of a paperless (end to end digital) loan process for small value loans upto Rs. 50, 000 (e-MUDRA) • DRI Scheme for SC/ST: • Quantum: Upto Rs. 50, 000 • Tenure: 2 to 3 years • 4% simple rate of interest SBI’s Initiatives • Pradahan Mantri Suraksha Bima Yojana (PMSBY): • Age: 18 to 70 years • Premium: Rs. 12/year • Risk Coverage: 2 lacs for accidental death or 1 lacs for partial disability • Pradhan Mantri Jeevan Jyoti Beema Yojana (PMJJY): • Age: 18 to 50 years • Premium: Annual premium of Rs. 330 • SB account holder • Life insurance cover of Rs. 2 lacs

PRADHAN MANTRI MUDRA YOJANA (PMMY) COLLATERAL FREE LOAN UPTO RS. 10 LACS UNDER PMMY SCHEME Parameters Features Nature of Facility Working Capital and Term Loan Purpose Business purpose, capacity expansion, modernization Target Group Business Enterprises in Manufacturing, Trading and Services sector including allied agricultural activities. Eligibility Criteria Existing & New units Quantum of loan (Min/Max) • Maximum loan amount : Upto Rs 10 lacs Loans upto Rs. 50, 000 are categorised as SHISHU • Loans from Rs. 50, 001 to Rs. 500, 000 are categorised as KISHORE • Loans from Rs. 500, 001/- to Rs. 10, 000/- are categorised as TARUN

Margin (%) Pricing Collateral Security Repayment Period Processing Fee/Upfront Fee Other Conditions Upto Rs. 50, 000/- Nil Rs. 50, 001 to Rs. 10 lacs: 10% Competitive Pricing Linked to MCLR Nil. To be covered under CGFMU. However, as Primary Security, Hyp. of P&M for TL and Hyp. of Stocks & Receivables for CC to be done. WC/TL: in 3 - 5 yrs including a moratorium of upto 6 months depending on the activity/ income generation. Review of WC/TL to be done annually. • Nil for Shishu and Kishore to MSE Units • For Tarun: 0. 50%(plus applicable tax) of Loan amount • The loans under Mudra Scheme are guaranteed by Credit Guarantee for Micro Units (CGFMU) and the same is provided through National Credit Guarantee Trustee Company (NCGTC). • The guarantee cover is available for five years and hence for advances granted under Mudra Scheme the maximum period is 60 months. • Leads are now available in Udyami Mitra Portal (www. udyamimitra. in). Site can be accessed by Branches with Username and Password • All Branches to issue MUDRA Ru. Pay Card for all the eligible CC accounts.

Contribution Under Mudra Loan, SBI has disbursed 5. 28 lakh crore to 11. 96 crore beneficiaries during last 3 years.

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