PhonePe Partners with Sidbi to Drive Digital Udyam Assist Registration

Fintech giant PhonePe on Wednesday announced the signing of a Memorandum of Understanding (MoU) with the Small Industries Development Bank of India (Sidbi) to provide a comprehensive end-to-end digital registration solution through the Udyam Assist Platform (UAP).

PhonePe and Sidbi Join Hands for MSME Empowerment

The partnership is aimed at formalising Informal Micro Enterprises (IMEs) across the country, helping them secure government schemes, access to credit facilities, and seamless integration into India’s fast-growing digital payments ecosystem.

The MoU was formalised in the presence of Union Minister for Micro, Small and Medium Enterprises (MSME), Jitan Ram Manjhi, underlining the government’s focus on expanding financial inclusion for micro-businesses.

PhonePe’s Digital Push for Small Businesses

Unlocking New Opportunities for IMEs

PhonePe highlighted that its collaboration with Sidbi will empower small merchants and micro-enterprises with digital-first solutions.

Hemant Gala, PhonePe’s Pending CEO, said:

"Our partnership with Sidbi will unlock access to government schemes, credit facilities, and crucial benefits for MSMEs and will help contribute to India's economic vision. Through PhonePe's user-friendly and efficient, end-to-end digital solution, we're not just facilitating registration, we are translating the vision of empowering small and micro businesses into a seamless digital reality."

Udyam Assist Platform: Driving Formalisation of Micro Enterprises

What is the Udyam Assist Platform?

The Udyam Assist Platform (UAP) was launched in January 2023 by Sidbi under the Ministry of MSME’s Formalisation Project. It provides an online registration facility for Informal Micro Enterprises that are not registered under GST, enabling them to receive formal recognition through the Udyam Assist Certificate.

Achievements of UAP

Over the last two years, the UAP has become a significant driver of formalisation among micro enterprises. According to Sidbi:

• More than 2.75 crore small businesses have been issued Udyam Assist Certificates.

• The initiative has enabled IMEs to become eligible for government-backed credit schemes, subsidies, and easier integration into the digital economy.

YM Kumari, Chief General Manager at Sidbi, said:

"Udyam Assist Platform has emerged as a major driver for the formalisation of non-GST registered Informal Micro Enterprises."

Why This Collaboration Matters

Benefits for IMEs and MSMEs

• Formalisation: Helps informal businesses gain official recognition.

• Access to Credit: Enables easier borrowing from banks and financial institutions.

• Government Schemes: Provides eligibility for subsidies, tax benefits, and welfare programs.

• Digital Integration: Strengthens participation in India’s expanding digital economy.

Strengthening India’s MSME Sector

The MSME sector contributes over 30% to India’s GDP and employs around 110 million people. Initiatives like UAP, supported by partnerships such as PhonePe–Sidbi, are expected to accelerate digital transformation and formalisation, thereby unlocking new growth opportunities for India’s small businesses.

About PhonePe

PhonePe is a leading Indian digital payments and financial services company headquartered in Bengaluru, Karnataka. It has become one of the most widely used and recognizable fintech platforms in the country, largely due to its robust integration with India's Unified Payments Interface (UPI).

Here's a breakdown of key information about PhonePe:

Ownership and History

• Founders: Sameer Nigam, Rahul Chari, and Burzin Engineer.

• Founding Year: PhonePe was founded in December 2015.

• Acquisition: In April 2016, the company was acquired by Flipkart.

• Parent Company: As Flipkart's parent company, Walmart is the majority shareholder of PhonePe.

• Redomiciling: In 2022, PhonePe completed its move to become a fully India-domiciled company, a process that began in late 2020. This allows it to chart its own growth path and prepares it for a potential IPO in India.

Core Services and Business Model

PhonePe operates as a "super app," offering a wide range of services beyond just peer-to-peer (P2P) payments. Its business model is built on diversifying its revenue streams through various financial and commercial services.

Key services include:

• UPI-based Payments: This is PhonePe's core offering. It allows users to instantly send and receive money directly from their bank accounts using their mobile number or a Virtual Payment Address (VPA). It is one of the largest players in the UPI ecosystem.

• Bill Payments and Recharges: Users can pay for a wide array of utilities, including electricity, gas, water, and broadband, as well as recharge mobile phones and DTH connections. PhonePe earns a commission from the service providers for these transactions.

• Merchant Payments: The platform is widely accepted by over 40 million online and offline merchants across India, enabling users to pay for goods and services by scanning a QR code or through a payment gateway.

• Financial Services: PhonePe has expanded aggressively into financial products, including:

  • Investments: It offers a platform for investing in mutual funds (e.g., liquid funds, tax-saving funds), digital gold, and has a stock broking and mutual fund investment platform called "Share.Market."

  • Insurance: PhonePe has an insurance brokerage license and offers a variety of insurance products, including health, term life, motor, and travel insurance.

  • Lending: PhonePe acts as a loan service provider, partnering with banks and non-banking financial companies (NBFCs) to offer personal and merchant loans. It does not lend on its own books.

• E-commerce: PhonePe has launched an e-commerce app called 'Pincode' which is built on the government-backed Open Network for Digital Commerce (ONDC) platform, focusing on hyperlocal commerce.

Conclusion

The PhonePe–Sidbi partnership for digital Udyam Assist registration represents a crucial step toward formalising India’s vast base of informal micro-enterprises. With over 2.75 crore businesses already registered, the UAP is proving to be a powerful tool for financial inclusion.

By leveraging PhonePe’s digital-first capabilities and Sidbi’s institutional framework, this collaboration ensures that small businesses gain easier access to credit, government schemes, and the digital payments ecosystem. As India strengthens its MSME sector under the Digital India mission, such collaborations will play a pivotal role in empowering entrepreneurs, boosting economic growth, and driving inclusive development.