Chandrasekhar Ghosh, CMD, Bandhan Bank, on Wednesday said demonetisation had the potentials of hitting micro-finance companies badly. On the sidelines of an interactive session themed, “Withdrawal of Rs 500/1,000 notes, understanding implications and managing the impact”, organised by the Indian Chamber of Commerce (ICC) in the city on Wednesday, Ghosh said, “There are 60,000 micro finance companies in India, which cater to about 2.5 crore customers. The installments are collected on a weekly basis and this has taken a plunge given the fact that agents cannot collect Rs 500 or Rs 1,000 notes from them. If this continues for some more time, there will be a steady rise in the number of defaulters,” he said.
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Further explaining, he stressed that the credit flow was not as high as the deposit flow and since the loan disbursement was also low, bank profit for the next quarter was likely to come down. Nevertheless, there were some positive sides to demonetisation, too, he added.
“Besides helping in stamping out black money and driving out fake notes from circulation, it would also motivate people towards cashless transactions. So far as implementation is concerned, the move is not matured enough for an economy of 1.3 billion population. Infrastructure should have been better because of which bankers and customers are suffering,” Ghosh said.
Anirban Dutta, chairman, Eastern India Regional Council (EIRC) of The Institute of Chartered Accountants of India (ICAI), said it was a bold step by the Modi government.
“Manifestoes of all political parties, ahead of the polls, stated that steps would be taken to curb the black money in the country. A bold step was the need of the hour and the NDA government did it. It should be appreciated. The troubles the people are facing are for the society’s good and some inconveniences are inevitable,” Dutta said.
Sandip Mitra, professor, Indian Statistical Institute and one of the panelists, lauded the demonetisation policy terming it as the “third generation economic reform” and said it should be supplemented by the state government’s measured moves to achieve success.
He added that the step would nudge the economy towards cashless transactions and would prove to be the engine of growth. “It is one of the bold steps in the past 30-40 years. There are some operational inconveniences and it might also give rise to speculations and unfair trade,” he said.
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