SME growth credit picks up after Demonetisation

Small businesses which were hit the hardest during demonestisation are bouncing back smartly , at least if their demand for credit is anything to go by. Bankers say that unsecured business loans portfolio, which is a lifeline for these small business entities, is showing a 15-18% growth over the past three months.

“After demonetisation, there was a slump in this section of business, but credit demand for unsecured small-ticket business loans has been steadily growing to around 15% to 18% now,“ said Shanti Ekambaram, president, consumer banking, Kotak Mahindra Bank.

Before the note ban in November last year, there was a steady growth in loan demand, which clocked almost 20%, she said.

The government's push to weed out cash from the system and replace it with plastic money had hit this segment the hardest as they mostly dealt with cash. Now with cash creeping back into the system and increased level of digitisation in their businesses, things seem to be falling back into place. “They use it largely for their working capital needs, unsecured loans are typically shorter tenure loans and are ammortised. So the players use the funding in keeping with their business cycle,“ said Ekambaram.

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