Ministry of MSME declares Aadhaar Authentication for informal Micro Units Voluntary

The Ministry of MSME has made Aadhaar authentication voluntary for informal micro units in order to encourage informal micro businesses (IMEs) to register for Udyam and reap the advantages of priority sector lending (PSL).

On May 22, 2023, MSME Development Commissioner Dr. Rajneesh issued a notice in this respect.

“Having been authorised by the central government, the MSME ministry hereby notifies that Aadhaar authentication of enterprises shall be performed on a 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 to priority sector lending,” the notification stated.

The announcement came in response to the MSME ministry’s petition to the federal government for Aadhaar verification “in the interest of good governance, preventing leakage of public funds, promoting residents’ ease of living, and enabling better access to services for them.”

In March of this year, the national government allowed the ministry for Aadhaar authentication of IMEs. The MSME Ministry created the Udyam Assist Platform (UAP) at the start of the year to bring IMEs into the official fold and enable them to participate in PSL.

The platform enables informal entities that are not GST registered to get a registration certificate from the government based on information obtained from banks or non-banking financial firms (NBFCs).