Ease of doing business for MSMEs: The notification followed the proposal submitted by the MSME ministry to the central government for the Aadhaar authentication “in the interest of good governance, preventing leakage of public funds, promoting ease of living of residents and enabling better access to services for them.”
Ease of doing business for MSMEs: Encouraging informal micro enterprises (IMEs) for Udyam registration to access to the benefits of priority sector lending (PSL), the MSMEs ministry has made the Aadhaar authentication for such enterprises voluntary. The notification for the same was issued on May 22 by MSME Development Commissioner Dr Rajneesh.
“Having been authorised by the central government, the MSME ministry hereby notifies that Aadhaar authentication of enterprises shall be performed, on voluntary basis, using Yes/No authentication facility, during the process of registration of owners of informal micro enterprises on its digital platform, to facilitate access for availing of priority sector lending,” the notification read.
The notification followed the proposal submitted by the MSME ministry to the central government for the Aadhaar authentication “in the interest of good governance, preventing leakage of public funds, promoting ease of living of residents and enabling better access to services for them.” The central government authorised the ministry for the Aadhaar authentication of IMEs in March this year.
“The idea here is to understand the profile of the potential beneficiaries of government’s schemes, the nature of their businesses, the challenges they face, etc., in order to take the right scheme in the right manner to them and ensure they are effective. Linking the business with Aadhaar does help the government in some way to address these areas,” Rishi Agrawal, CEO & Co-Founder of compliance management software firm TeamLease RegTech told FE Aspire.
However, it is voluntary to ensure that promoters are comfortable with sharing their Aadhaar details instead of being anxious about linking their personal and professional lives, said Agrawal. “I think over time the promoters’ confidence in sharing Aadhaar details will grow instead of being voluntary.”
The MSME ministry in January this year had launched the Udyam Assist Platform (UAP) to bring IMEs into the formal fold and enable them for PSL. The platform allows informal units not registered under GST to get a registration certificate from the government based on their information with banks or non-banking financial companies (NBFCs).
Earlier this month, the Reserve Bank of India (RBI) had also informed all financial institutions including banks and NBFCs to treat IMEs not covered under the GST regime or exempted from the CGST Act, 2017, but having the Udyam Assist Certificate (UAC) as micro enterprises for classification under the PSL norms.