CRISIL’s nationwide survey of micro, small and medium enterprises (MSMEs) shows a substantial shift away from cash transactions following the government’s move to demonetise bank notes of Rs 500 and Rs 1,000 denomination recently.
To be sure, the cash ban has impacted business operations, but more importantly, demonetisation has spurred a major change in the way MSMEs conduct business. Most of them see only a short-term impact of demonetisation, and more than three-fourths believe it will be business as usual by June 2017. As many as 41 per cent of MSMEs said their clients have shifted to cheque or electronic payment since demonetisation.
Says Ashu Suyash, Managing Director and CEO, CRISIL: “It is heartening to see this marked shift to cheque or electronic payments, especially in the traditional, cash-intensive sectors such as textiles, agricultural products, electrical equipment, steel, consumer durables and automobiles. Given that these are the core sectors of the economy, a move to ‘less-cash’ transactions will eventually transform business models in the MSME sector.â€Â