LS passes factoring bill to help MSMEs

LS passes factoring bill to help MSMEs

Factors provide liquidity to SMEs against their receivables from customers and is regarded as a cash management tool

Friday, December 23, 2011

NEW DELHI, INDIA: The Lok Sabha on Wednesday approved a bill to regulate the factoring business and help the micro, small and medium enterprises (MSMEs) in dealing with liquidity problems, according to media reports.

The Regulation of Factors (Assignment of Receivables) Bill 2011, which was passed by voice vote, was introduced in the House by Finance Minister Pranab Mukherjee during the last Budget Session.

“The bill is applicable to all types of industry whether it is small, medium or big,” minister of State for Finance Namo Narayan Meena said.

Factors provide liquidity to SMEs against their receivables from customers and is regarded as a cash management tool. Among other provisions, the bill proposes to ban financial institutions from directly entering the factor business.

©CIOL Bureau