Ease of doing business for MSMEs: MSME Minister Narayan Rane on Wednesday launched a new platform Udyam Assist – a formalisation project by the MSME ministry and platform’s implementing agency SIDBI to boost Udyam registration of informal micro enterprises in the country and enable them for priority sector lending (PSL) benefits. The platform, now live, seeks to complement the Udyam registration portal of the ministry for MSMEs. According to the MSME Ministry, the portal was inaugurated with the inclusion of 8 lakh informal micro enterprises into the formal ambit.
The Background
Out of around 6.3 crore MSMEs in the country, over 99 per cent are micro units and out of 1.33 crore MSMEs registered on the Udyam portal, only 40,000 are micro enterprises. Unlike small or mid-sized enterprises, micro units including ultra micro enterprises such as street vendors generally lack the necessary documents, motivation, and ability to register on the Udyam portal.
Moreover, with the growing significance of digitisation in business, getting these enterprises into the formal economy through digital channels has also gained prominence for the government. That was the intent to launch the new Udyam Assist Platform to ‘assist’ informal micro units, which are not registered with GST authorities, through a digital and paperless medium, according to the information available on the UAP portal.
“Considering the informal profile of informal micro enterprises (IME), an assist methodology is proposed for their registration. Registrations will be done with the assistance of Designated Agencies (DAs) like banks, non-banking financial companies (NBFCs), micro finance institutions (MFIS), small finance banks, regional rural banks, scheduled cooperative banks, etc., which will share the required data for Udyam Registration,” the portal read.
This is because even though micro enterprises are not registered units, the promoters running them are well banked. Their transaction history helps banks understand their liquidity and repayment capacity for loans raised. This surrogate data can be helpful in providing these units loans under priority sector lending and help address the larger issue of lack of access to affordable credit in the MSME sector. Importantly, access to credit via formal route is among the key goals for the government to launch portals such as Udyam registration and now UAP.
To collect the relevant data of these enterprises from DAs and use the data for registering these units on the Udyam portal, the MSME ministry has authorised SIDBI, according to the details on the UAP portal. The enterprises registered through this ‘assist’ process will have an Udyam registration number or URN of an exclusive number series called the Udyam-I and will also get Udyam Assist Certificate (UAC).
How DAs can register
DAs can register on UAP with the required information along with an Authorisation Letter designating their Nodal Officer for the UAP. NBFCs and NBFC-MFIs will have to share their RBI registration certificate as well. On the other hand, MFIs which are not NBFCs will have to share a letter of confirmation from their Self-Regulatory Organisation (SRO). Thereafter, SIDBI will approve the registration of the DA and will provide the latter with its login credentials on UAP, according to the information available on the UAP portal.
How DAs can register enterprises
Once registered, DA’s authorised official will get access to an interface on the portal for uploading data of the enterprise using the platform protocol of SFTP (secure file transfer protocol), smart EXCELS, etc. Here, enterprises won’t have to share any document with their bank from their end for registration, according to the portal. DAs will also get access to a dashboard for MIS (management information system) or reports for monitoring the registration status of the enterprise onboarded by them.
The UAP will process and validate the data to generate the Udyam registration number and UAC for the enterprise. The registration number and the certificate will then be available for download to both DA as well as the enterprise from UAP.
To summarise, UAP is a digital platform, which requires financial institutions to share data — of their informal micro enterprise customers — required for registration, validate the data, register enterprises on the Udyam registration portal and generate the registration number along with UAC.
The Udyam registration much like other MSMEs will act as a central digital identity for the micro enterprises as well and contribute to the government’s overall aim of formalisation of the MSME sector. Apart from loans to enterprises, the formalisation approach will also help lenders meet their priority sector lending targets.
Moreover, “market discussions have revealed that such registration shall also make it easier for merchant QR codes to be issued to these UAP enterprises, further enhancing their access to digital payment ecosystem critical for building their credit profiles,” the portal said.
According to the MSME ministry, the platform was launched with the inclusion of 8 lakh informal micro enterprises as formal units. “These 8 lakh units are among the beneficiaries of the government’s scheme for street vendors PM SVANidhi scheme,” a source aware of the scheme told FE Aspire. The scheme provides for a collateral-free working capital loan of up to Rs 10,000 in order to formalise street vendors.