ECGC to offer direct factoring service for MSMEs

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ECGC to offer direct factoring service for MSMEs

The Export Credit Guarantee Corporation of India () will provide a for micro, small and medium enterprises in the current financial year to help them meet their working capital requirements without having to approach banks, according to the latest e-newsletter of the Federation of Indian Small, Micro and Medium Enterprises ().

This was revealed by ECGC Chairman and Managing Director in a recent interaction with the media, the newsletter said. He said ECGC, with a network of 62 branches, will also open bank branches in Ahmedabad, Kollam and one in Tambaram, Chennai this year.

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.

The Reserve Bank of India () had earlier proposed to dematerialise and discount micro, small and medium enterprises' 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 recently introduced a new country-risk rating for the benefit of . The gross premium collection of ECGC had gone up by over 12 per cent to Rs 1,305 crore in the year ended March 31, 2014, compared to the year-ago period.