Parliament passes Factoring Regulation Bill to help expedite MSME payments

Parliament on July 29 passed the Factoring Regulation (Amendment) Bill, 2021, to bring changes in the legislation aimed at helping the Micro, Small and Medium Enterprise (MSME) sector to tide over their issue of delayed payments as it seeks to broaden the participation of entities undertaking factoring.

The bill is also likely to enhance traction on the TReDS platform introduced by the RBI back in 2014 for entrepreneurs to unlock working capital tied in their unpaid invoices.  The Bill, which will help the micro, small and medium enterprises sector in the availability of working capital, was passed in the Rajya Sabha on Thursday. It was passed by the Lok Sabha on July 26.

'It is a very important Bill which will benefit the MSMEs of this country because a difficulty is constantly expressed by the MSME that their receivables are getting delayed. ''As a result, there is a provision of selling their receivables to a third party. If the third party is going to make an immediate availability of funds, they shall be able to move their business smoothly. There are several such advantages in factoring from payment of the seller,'' Sitharaman said.

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