Aiding In Legitimising Business

While many feel that demonetisation has hit the Indian economy between the eyes, it does have a silver lining. Even as everyone experienced short-term pain, it allowed or forced individuals to legitimise their businesses and do better record-keeping and invoicing as well as reduce the use of black money in their everyday transactions. When the dust finally settled, the number of companies with formal documentation had expanded. Historically, there has always been a large pool of individuals and businesses and it is difficult to discern and verify the ‘earning capacity’ which serves as a critical element for decision-making on lending money. This had led to Non-Banking Financial Companies (NBFCs) using surrogate estimates – how much would one earn based on their spending pattern, surveys to determine average income and personal interviews to assess the real income...