Small Business and Non-Institutional Credit: A Study in West Bengal

This is a preliminary study looking at small business and non-institutional credit in West Bengal from a primary survey. In this paper, I want to observe the role of non-institutional credit in the development of small businesses. Volume of small business in West Bengal is relatively large and non-institutional credit is deeply entangled with small business in different modes and styles of operation. I have selected two urbanized districts Kolkata and North twenty-four Parganas, which forms the core business area in the state and I am looking at the forms and features of non-institutional credit markets be fitting to the characters of small businesses across two districts.

The study reveals five forms of non-institutional credit system, such as trade credit arrangement, unregistered chit fund, traders’ association, individual moneylendig system and hundi system, each feature of its own. Small businesses favour non-institutional credit markets, because of certain advantages, such as low transaction cost, spontaneity and flexibility, mutual trust, unique record keeping system and acceptance of flexible collateral. 

This is a preliminary study looking at small business and non-institutional credit in West Bengal from a primary survey. In this paper, I want to observe the role of non-institutional credit in the development of small businesses. Volume of small business in West Bengal is relatively large and non-institutional credit is deeply entangled with small business in different modes and styles of operation. I have selected two urbanized districts Kolkata and North twenty-four Parganas, which forms the core business area in the state and I am looking at the forms and features of non-institutional credit markets be fitting to the characters of small businesses across two districts.

The study reveals five forms of non-institutional credit system, such as trade credit arrangement, unregistered chit fund, traders’ association, individual moneylendig system and hundi system, each feature of its own. Small businesses favour non-institutional credit markets, because of certain advantages, such as low transaction cost, spontaneity and flexibility, mutual trust, unique record keeping system and acceptance of flexible collateral.