The Factoring Regulation (Modification) Invoice, 2021 will broaden credit score amenities for small companies, and can assist them in accessing funds from 9,500 non-banking monetary firms (NBFC), Finance Minister Nirmala Sitharaman tweeted.
The amendments accredited by Rajya Sabha Thursday will give an impetus to the economic system by offering an environment friendly working capital cycle for micro, small and medium enterprises (MSMEs), Sitharaman stated.
The Invoice seeks to extend the variety of NBFCs providing factoring service to over 9,500 from from seven presently. Factoring is a transaction the place a enterprise sells its receivables from a buyer to a 3rd occasion or a ‘issue’ to get funds. Now all NBFCs can be permitted to undertake factoring enterprise and take part on Commerce Receivables Discounting System (TReDS) for discounting the invoices of MSMEs, Sitharaman stated.
The Invoice seeks to offer a powerful oversight mechanism for the factoring ecosystem, and can empower the Reserve Financial institution of India to make rules with respect to factoring enterprise, Sitharaman stated.
Whereas transferring the Invoice in Lok Sabha for approval, Sitharaman had stated the federal government has accepted the suggestions of the Standing Committee which had scrutinised the