We all are aware of the current situation prevailing due to demonetization of Rs 500 and Rs 1000 notes. Source<> http://www.bizbilla.com/articles/Stepping-Stone-for-Indian-SMEs-1720.html

1. Stepping Stone For Indian
SMEs
We all are aware of the current situation prevailing
due to demonetization of Rs 500 and Rs 1000 notes.
The Small and Medium Enterprises (SME) can
take this as an advantage to move digital as this
could be their first step to embrace digitization.
Joyjeet Bose, Vice President, SME Operations,
Enterprise Business, South - Tata Teleservices said
that the cost of adopting digitization has often kept
SMEs away from going digital. Bose said that the

2. new generation of SMEs, who will take over from
their fathers, will gradually adopt digital
technology tactics to cut down supply chain costs
and streamline operations.
Rahul Agarwal, Founder and CEO of Organic
Harvest agreed that a big, bang reform like this
could have various impact across sub-sectors. He
also added that so for companies like them who
target the middle and upper middle income
category of customers, the sales were affected
initially, for a few days at the macro level but since
most of their customers are urban based they
immediately shifted to plastic money and digital
wallet. Hence, things came back to normal very
soon.
While talking about the distribution channel
partners, they are still facing a cash crunch and it
might take two to three months for them to get
back to the regular business cycle. The effect is
going to vary from industry to industry and their

3. target customers. Most of the SMEs have realized
the importance and the benefits of accepting and
making payment digitally. So, they are adapting
very fast and in the long run, it will be beneficial for
the whole economy.
According to official estimates, the incoming bank
deposits could help cash burdened SMEs and
MSMEs to get loans at lower rates. Sashank
Rishyasringa, Co-founder & Managing Director at
Capital Float, which provides loans to this section
of business owners said MSMEs that rely on cash
payments between buyers and suppliers will feel
the effects of demonetization most acutely.
He added that these will include large swaths of
unorganized retail – kirana stores, small
distributors, merchants – as well as producers and
traders operating in cash-dominated segments
such as transportation and agricultural
commodities. SMEs in these segments used to
approach the informal lending sector for their

4. working capital needs.
Cash liquidity concerns are causing these
borrowers to shift their focus towards the formal
lending space. With digital lending platforms
offering working capital finance in a click of a
button, these segments will be able to avail easy,
instant credit and eventually drive up business
volumes.
With the government now it mandatory for the
government departments to make any payment
above Rs 5000 to suppliers, contractors,
grantee/loan institutions, this could further fuel
actual businesses adopt newer strategies and
mark new strides in the SME space.