July 29, 2021 8:47:15 pm
Amid protests by the Opposition over the Pegasus scandal and the farm laws, Rajya Sabha Thursday passed the Factoring Regulation (Amendment) Bill, 2021 that broadens participation in that sector.
Factoring firms provide working capital to micro, small and medium enterprises — which often have to wait long for payments — by buying their invoices. The opening up of the factoring sector to more non-banking financial corporations is expected to help MSMEs access working capital more easily.
The Upper House, meanwhile, functioned for 15 minutes in the second half of the day and was adjourned after Agriculture Minister Narendra Singh Tomar introduced the Coconut Development Board (Amendment) Bill, 2021. Opposition parties, that raised slogans on the pegasus snooping controversy, price rise and the three farm laws, did not participate in the debate on the Factoring Regulation Bill, which amends the Factoring Regulation Act of 2011.
Finance Minister Nirmala Sitharaman, who tabled the Bill, said: “There are difficulties constantly faced by MSMEs in that their receivables get delayed, and therefore sending these to a third party. This Bill will ensure that there businesses run more smoothly and that there is a healthier cash flow. Many of the clauses of the Bill are based on the UK Sinha committee recommendations. The Bill was first introduced in September 2020 and the same month was referred to the standing committee of finance.’’
The Finance Minister said one legislative and eight non-legislative suggestions had been made by the standing committee. “All these suggestions have been accepted and incorporated
in the Bill. There is one component which the GST council has suggested, which has also been accepted,” she said.
KR Suresh Reddy of TRS supported the Bill but said it could have been more comprehensive. “Many of these piecemeal Bills are being brought to the House, which will not truly benefit MSME. The Prime Minister’s stance on MSME’s is very good, but in reality the actual number of MSMEs benefitting are very low. MSME’s are facing a lot of statutory compliances and many are shutting down because of this. Let the Finance Minister look in to this as well,’’ he said.
M Thambidurai of AIADMK, while supporting the Bill, said: ”MSME is an important sector but facing many problems in getting finance.’’
Responding to the MPs, Sitharaman said: “Presently there are seven NBFCs available to MSMEs in the country, but we are increasing the number of NBFCs to 9,000. There are so many NBFCs that the MSMEs can now get direct access to. The MSME sector is important to the economy and contributes 40 percent of all exports in the manufacturing sector.’’