A RBI committee led by former SEBI chairman UK Sinha has presented its report on Micro, Small and Medium Enterprises (MSMEs). The committee, in its report, highlights the problems with Udyog Aadhaar and in-person KYC, and lack of infrastructure for cash-lending; it makes recommendations to tackle these issues, among other things. The committee has suggested creating a Universal Enterprise ID and using Google Duo and Facetime to enable video KYC. Here's a lowdown: Problems with Udyog Aadhaar The committee says that while registration of MSMEs became much easier after the introduction of Udyog Aadhaar in September 2015, the biggest problem with it is that relies on self verification while signing up - which isn’t a reliable source of information for lenders and buyers. Udyog Aadhaar is an Aadhaar based electronic platform and requires a few basic entries including PAN details. Registration certificate is also issued electronically. The report says that the Udyog Aadhaar database needed a lot of cleaning up since several retailers have signed up for it. Since the system relies on self-verification, there have been several noted instances where there is no way of knowing is a company that signed up for Udyog Aadhaar existed at all. Building “digital trails” is increasingly becoming an important pre-requisite for access to credit. Using PAN as Universal Enterprise ID Since the committee found inconsistencies with Udyog Aadhaar, it recommends setting up of a Universal Enterprise ID - much like an Aadhaar, but for organisations. According to the committee, currently, only a registrar…
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