New law factors in NBFC funding to MSMES

Factoring Regulation (Amendment) Bill, 2021 was passed by the Parliament last month, broadening participation of many other companies in the sector. Factoring provides working capital to MSMES, which often have to wait long for payments, by buying their invoices. The opening up of the factoring sector to more non-banking financial companies (NBFCS) is expected to help MSMES access working capital more easily. Responding in the Lok Sabha, Finance Minister Nirmala Sitharaman said: “Currently, there are seven NBFCS available to MSMES in the country, but we are increasing the number of NBFCS to 9,000."