Credit and Finance for MSMEs: Lok Sabha on Monday passed the Factoring Regulation (Amendment) Bill, 2020 amid protest from the Opposition, to amend the Factoring Regulation Act 2011. The bill will enable micro, smaller and medium enterprises (MSME) tide more than the challenge of delayed payments. Introduced in Lok Sabha in September last year, the bill seeks to broaden participation of entities undertaking factoring. The bill is most likely to improve traction on the TreDS platforms introduced by the Reserve Bank of India back in 2014 for entrepreneurs to unlock working capital tied in their unpaid invoices. According to the government’s delayed payments monitoring portal MSME Samadhaan, more than 83k delayed payment applications have been filed by micro and smaller enterprises, as of July 26, 2021, involving Rs 22,311 crore, of which 7,920 applications involving Rs 1,433 crore had been disposed.
“As per the standing committee’s report, factoring credit contributes only 2.6 per cent of the total formal MSME credit in India versus 11.2 per cent in China. The bill heralds the growth of factoring business in India at par with developed countries. This would increase the number of factoring entities from the current seven to a few thousand. This would also increase the flow of credit exponentially while bringing down the cost of credit for MSMEs,” Ram Iyer, Founder & CEO, Vayana Network told TheSpuzz Online.
to be updated…