Context:
The PM Vishwakarma Scheme, launched to empower India’s traditional artisans through financial aid and skill development, is currently grappling with low loan disbursal rates from public sector banks (PSBs). Despite its ambitious scope and ₹13,000 crore budget, implementation challenges have hindered progress.
Key Highlights
Loan Approval Snapshot
- Total loan applications received: 1.39 million
- Loans approved: 390,000 (~28%)
- Applications rejected: 777,000
- Applications deemed ineligible: 157,000
- Loans declined by artisans: 158,000
Scheme Overview
- Launched: September 2023 (PM Modi’s birthday)
- Target Beneficiaries: Artisans in trades such as blacksmithing, goldsmithing, pottery, carpentry, sculpting
- Scheme Duration: FY2023–24 to FY2027–28
- Total Outlay: ₹13,000 crore
Reasons for High Rejection Rate
- Mismatched loan purpose
- Applicants untraceable or lacking basic documentation
- History of non-performing assets (NPAs) or previous loan defaults
- Poor creditworthiness despite need
- High perceived risk by banks
Government Response & Proposed Reforms
- Escalation of rejections: Rejected applications to be reprocessed or reviewed beyond branch level
- Interest subvention processing: Extend deadline for monthly submissions (from 6th to 10th of each month)
- Increased integration with banking systems: Track disbursement, closure, NPA status, etc.
- Better tracking: Introduce ‘withdrawn’ tagging for applicants who decline loans
- Boost engagement: Re-engagement mandate for bank officials with artisan applicants
Implementation Bottlenecks
- Lack of standardized documentation among informal artisans
- Banks’ reluctance to finance high-risk borrowers
- Inconsistent application processing at the branch level
- Limited digital literacy and accessibility for applicants
