New Delhi, Jan 11 (KNN) More than two thirds of small and medium enterprises (SMEs) have seen a drop in business manly due to currency crunch, reveals a survey.

According to a media report, a survey conducted by State Bank of India (SBI) among small businesses pointed that more than two-thirds of them have seen a drop in business. While 30% of respondents said that business has dropped by half, another 23% said that the drop has been between 40-50%.

The main problem identified by most of the respondents was the supply of only Rs 2,000 denomination notes without intervening notes of Rs 500. This has resulted in chaos as there was not enough currency notes to change the Rs 2,000 denomination notes.

Interestingly, the survey reveals that 63% of the respondents come out in support of demonetisation.

"Overall the decline in business is less than 50% for the majority of the businesses that were impacted. Construction sector and the informal roadside vendors seem to be the worst hit. Less impact was seen on automobile and chemist shops that already had digital modes of transaction," SBI said in its Ecowrap report.

Within the textile sector, shopkeepers dealing with retail segment have been affected more than those in the wholesale segment. The gems and jewellery sector has also been hit with declining sales.

Payments are moving to electronic mode gradually. The survey showed that 15% of cash-based transactions have moved to digital in weeks ensuing demonetisation. "This means that Rs 25,000 crore of cash based transactions have moved to digital in the last two months. If this is so, this is a good beginning," the report said.

In its report, SBI has suggested that banks be allowed to charge the large merchants, which could be used to cross subsidise the small merchants.

"It could be a sustainable model, otherwise new merchants need to be convinced about the uncertainty beyond March '17," the report said. The bank has also petitioned the RBI to enhance the user limits for e-wallets to make it easier for both users and merchants to shift more of their cash transactions to digital. Following demonetisation RBI had revised the per month limits on mobile wallets spend to Rs 20,000 for users and Rs 50,000 for bank transfers by merchants. (Courtesy: TOI)