What changed
The Government of India, vide Gazette Notification S.O. 1296(E) dated March 20, 2023, has specified that certificates issued via the Udyam Assist Platform (UAP) to Informal Micro Enterprises (IMEs) shall be treated at par with Udyam Registration Certificates for the purpose of availing Priority Sector Lending (PSL) benefits. IMEs are enterprises unable to register on the Udyam Registration Portal due to lack of PAN or GSTIN, and their turnover (if exempt from GST returns) is the sole criterion for UAP eligibility. An interface between UAP and Udyam Registration Portal allows IMEs to migrate once they obtain required documents.
What it means for you
Banks can now classify loans to IMEs with Udyam Assist Certificates as Priority Sector Lending under the Micro Enterprises category, expanding the PSL pool. This formalises a large segment of informal businesses, reducing credit risk and improving financial inclusion. Lenders must update their MSME classification processes to accept UAP certificates as valid proof.
What you must do
- Update internal MSME classification policies to accept Udyam Assist Certificates as valid registration for PSL benefits.
- Train credit and operations staff on recognising UAP certificates and verifying IME eligibility (turnover-based, no PAN/GSTIN required).
- Ensure systems can track and report PSL advances to IMEs separately for regulatory compliance.
- Coordinate with designated agencies (e.g., banks, NBFCs) to facilitate UAP registration for eligible informal enterprises.
Who it affects
All commercial banks (including SFBs, LABs, RRBs), Primary (Urban) Co-operative Banks, State Co-operative Banks / District Central Co-operative Banks, All-India Financial Institutions, Non-Banking Financial Companies, Informal Micro Enterprises (IMEs) without PAN/GSTIN
What is an Informal Micro Enterprise (IME) under this circular?
An IME is an enterprise that cannot register on the Udyam Registration Portal due to lack of PAN or GSTIN. Its turnover (if exempt from GST returns) is the sole criterion for UAP eligibility.
Can we treat Udyam Assist Certificates as valid for all MSME benefits?
No, the circular specifies that UAP certificates are at par with Udyam Registration Certificates only for Priority Sector Lending (PSL) classification as Micro Enterprises.
What happens when an IME later obtains PAN or GSTIN?
An interface between UAP and Udyam Registration Portal allows IMEs to migrate from UAP to URP once they obtain the required documents, enabling full MSME benefits.