ECGC to offer direct factoring facility for MSMEs

Mumbai, May 20 (KNN) The Export Credit Guarantee Corporation of India (ECGC) will offer direct factoring facility for micro, small and medium enterprises in the current financial year to help meet working capital requirements of the MSMEs, ECGC Chairman cum Managing Director N Shankar, has said.

Factoring is a financial management service in which a business sells its accounts receivable at a discount to a third party funding agency to raise capital.

Addressing media, Shankar said, the corporation will offer direct factoring facility for micro, small and medium enterprises (MSMEs) in 2014-15 to ``help meet their working capital requirements.’’

He said ECGC, with a network of 62 branches, will also open bank branches in Ahmedabad, Kollam and one in Tambaram, Chennai this year.

Earlier, the Reserve Bank of India (RBI) had proposed to dematerialise and discount the MSMEs bills through reverse factoring to address the problem of delayed payments to the sector from their large sized buyers. Such bills and invoices are traded in the secondary market, which needs to be developed. ECGC had recently introduced a new country-risk rating for the benefit of MSMEs.