New Delhi, Mar 14 (KNN) The Micro, Small and Medium Enterprises (MSMEs) and small business segment is yet to recover from the tremor of demonetization and the early effect of new taxation, a report by Transunion CIBIL and SIDBI informed.

The report further said that the MSMEs with borrowing under Rs 1 Million are yet to come out of the impact.

“Micro, small and medium enterprises (MSMEs) with exposures from Rs 1 million to Rs 100 million have recovered to pre-demonetisation levels, (but) the segment with exposure of less than Rs 1 million has still not recovered to that extent”, the report said.

Dissecting the credit market, the report revealed that MSMEs are yet to head towards formal finance for credit.

According to the report, only 5 million of the total 50 million MSMEs have accessed formal finance system for obtaining loans.

However despite the overall low figure, the country experienced formalisation process, as a result of which an increase in ‘new to credit’ MSMEs was observed at 4 lakh units in the second half of 2017. In the corresponding period of the previous year, the count stood at 2.7 lakhs.

On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1000 banknotes of the Mahatma Gandhi Series. The government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism.

Following Demonetization, the government announced the rollout of the new taxation – Goods and Services tax (GST) in the country. (With Inputs from a media report) (KNN/DA)