The deal with the Future Retail is expected to close in the next few weeks, sources close to the development said.
The company has a mission to create 20 million entrepreneurs by 2020.
Commerce and industry ministry is working on a proposal that would be finalised soon and sent for Union Cabinet's approval.
The store saw nearly 40 lakh visitor over the past one year.
The partnership will also allow the company to reach new customers in tier II cities and beyond.
HDFC Bank's Smita Bhagat said that the initiative will make a big difference in the lives of small traders.
The move assumes significance in view of upcoming festive season that accounts for a significant share of e-commerce annual sales.
Small towns are becoming the driving force behind e-commerce growth in the country as online retailers.
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