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Understand The Utility of DigiLocker for Indian MSMEs | SMEStreet Report

Here is a SMEStreet report compiled by Gauravi Mathur, in which she explained the role and relevance of digilocker among Indian MSME landscape.

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Digilocker to assist MSMEs

With developing technology, means to store and transfer data has also changed. It has been a big help in the financial and banking sector as well. The process of banking and commerce has mostly become digitized and is constantly becoming more and more techno friendly with time.

According to the Ministry of Commerce and Industry, 40% of all digital transactions take place in India. Digitalization of financial services makes it easier for customers and industries to carry out transactions and increase their range of accessibility. With the constantly broadening sphere of internet and to fully benefit from the technological development the Government is also changing its method.

During the budget of 2023 – 24, Finance Minister Nirmala Sitharaman said, “A one stop solution for reconciliation and updating of identity and address of individuals maintained by various government agencies, regulators and regulated entities will be established using DigiLocker service and Aadhaar as foundational identity.” This will not only help the MSMEs but also fintech startups as further mentioned by the Finance Minister in her statement, “Fintech services in India have been facilitated by our digital public infrastructure including Aadhaar, PM Jan Dhan Yojana, Video KYC, India Stack and UPI. To enable more Fintech innovative services, the scope of documents available in DigiLocker for individuals will be expanded.”

Explaining on how the services will put into use, Nirmala Sitharaman described that, “An Entity DigiLocker will be set up for use by MSMEs, large business and charitable trusts. This will be towards storing and sharing documents online securely, whenever needed, with various authorities, regulators, banks and other business entities.”

What is Digilocker?

Introduced in 2015 by the Ministry of Electronics and Information Technology, Digilocker is a flagship programme for individuals that allows the citizens to store and share their documents such as driving licence, Aadhaar, educational degrees and certificates and other items. The service has so far onboarded over 14.6 Cr individuals on the platform and issued around 5.6 Bn documents. The top issued documents on the platform includes the Aadhaar, policy documents, insurance policies for two wheelers and PAN verification records.

The platform consists of 2,311 issuers, out of which the top issuers are UIDAI for Aadhaar, Ministry of Road Transport and Highways, Income Tax Department, New India Assurance Co. Ltd and all states for driving licence and registration documents.

How will Digilocker benefit MSMEs and fintech startups?

Digilocker is a platform that has already become a crucial part for the citizens and will now also help the MSMEs and fintech startups. The platform will allow the storing and sharing of important documents in a secure and protected manner, whenever needed, with various authorities, banks, business entities and regulators. This will also reduce their cost incurred due to physical storing and reduce the time-consuming process of searching and maintaining the documents in a physical format. The digital storing will also ensure the protection and reduce the chances of loss and damage. Furthermore, it will also ensure the safety and security of the stored documents as no tampering can be done with the protected documents that will only be accessed by those who know the key and password for the locker. This will also help the enterprises and startups by giving them a new way to collect and use their data and expand their innovative services and make the process easier for consumers as well. It will also simplify the process of Know-your-customer (KYC) and enable fintech entrepreneurs to offer more innovative services including Aadhaar, PM Jan Dhan Yojana, Video KYC, India Stack and UPI. The scope of the documents which are made available in the Digilocker platform will also be expanded. By seamlessly connecting with other digital platforms and services, DigiLocker will be of service to SMEs and start-ups. For instance, the platform can link with GSTN (the Goods and Services Tax Network) to let companies submit their GST filings right from their online storage space and other government services like eSign and Aadhaar-based authentication. This can limit the possibility of errors or discrepancies while also saving the businesses’ time and effort when filing taxes.

With many such advantages in line for the businesses, adoption of Digilocker will be a welcomed decision by the SMEs and startups and it will become an important part of India’s financial sector.


SMEStreet Edit Desk

SMEStreet Edit Desk is a small group of excited and motivated journalists and editors who are committed to building MSME ecosystem through valuable information and knowledge spread.

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