Aadhar Authentification For Informal Msme Units Becomes Voluntary: Msme Ministry Taking Steps To Boost Udyam Registrations

Aadhar Authentification For Informal Msme Units Becomes Voluntary: Msme Ministry Taking Steps To Boost Udyam Registrations

On 22nd May 2023, Dr. Rajneesh, the MSME Development Commissioner issued a notification. This notification aimed to increase Udyam registrations among informal micro enterprises (IMEs) by making Aadhar authentification voluntary. This would lead to IMEs accessing benefits of the priority sector lending (PSL). 

The notification stated that the new changes as been authorized by the central government, allowing the MSME ministry to make Aadhar authentification voluntary. A Yes/No facility will be provided to informal microenterprises in the registration process, making it easier for them on the digital platform to access priority sector lending. 

The DC MSME office was contacted via calls and emails, however, they failed to respond immediately. 

A proposal submitted to the Central government for Aadhar authentification by the MSME ministry followed the notification. The proposal stated that this change was in the interest of good governance and would bring about the prevention of leakage of public funds, access to better services, and promotion of ease of living for residents.  In March 2023, the central government authorized Aadhar authentification for IMEs by the Ministry of MSMEs. 

Rishi Agrawal, the CEO, and Co-Founder of TeamLease RegTech, a compliance management software firm, told FE Aspire, his opinion on the change. He claims that it is vital to understand a few things to take up the right scheme for correct and effective utilization.

This includes understanding the potential beneficiaries of government schemes, and the challenges and nature of the business. The government insists upon Aadhar authentification to address some of these issues. 

Agrawal also stated that promoters may not be comfortable with linking their Aadhar cards to their business because it violates their privacy, and disintegrates the line between their professional and private lives. Agrawal believes that with time, promoters will be more comfortable and confident in sharing their Aadhar details. 

Udyam Assist Platform (UAP) was launched in January bu the MSME Ministry, to allow IMEs to access PSL and bring them formal recognition. Informal units that are not registered under the GST Act can gain a registration certificate from the government. This certification would be given based on their interaction with banks or non-banking financial companies (NBFCs). 

All financial institutions including banks and NBFCs are to treat IMEs under the PSL Norms, regardless of whether they are registered under GST or exempted from the CGST Act, 2017 as long as they have an Udyam Assist Certificate. This notification was sent to all the financial institutions in India by the Reserve Bank of India (RBI) earlier this month.

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