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Last Updated : Jan 06, 2017 09:02 PM IST | Source: Moneycontrol.com

Demonetisation impact: Smaller MSMEs see big shift from cash to e-payments, says Crisil

The survey, which covered more than 1,100 MSMEs between November 24 and December 24, found that almost half of the MSMEs with annual revenue of Rs 2 crore or less saw a substantial shift away from cash transactions.


Moneycontrol Bureau

Around 41 percent of micro small and medium enterprises (MSME) in India witnessed a shift away from cash to digital payments and cheques after the government's move to demonetise higher denominations, according to a survey conducted by Crisil.

Ashu Suyash, Managing Director and CEO, CRISIL says, “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."

The survey, which covered more than 1,100 MSMEs between November 24 and December 24, found that almost half of the MSMEs with annual revenue of Rs 2 crore or less saw a substantial shift away from cash transactions. Whereas, only a third of the MSMEs with revenues above Rs 25 crore witnessed a greater shift towards digital payments.

MSMEs from Tier 2 cities and smaller towns have also seen a significant shift of around 42 percent to cheque or electronic payments.

"This indicates that the transition is geography agnostic, and, therefore, has greater implications in the way transactions take place in small cities and towns,” says Suyash.

MSMEs from small towns may face greater challenges due to heavy reliance on cash than in bigger cities.

Also, MSMEs from North and East India, according to Crisil, may report negative growth in revenues in the second half of FY17 due to the high amount of usage of cash in these regions.



MSMEs usually perform better in the second half of the fiscal year between October and March. But due to the cash ban, these enterprises may not see any growth this fiscal. Most MSMEs which were surveyed feel the pain would last till as long as June 2017.

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First Published on Jan 6, 2017 10:52 am
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