With credit still not available to the end-user, the model of factoring and discounting of bills which have benefitted industries in countries like the US can be used as an alternative during the pandemic. "Factoring and Bill discounting as a product have the potential to address the liquidity issues faced by the MSMEs", stated Mr Anshuman Mohanty, Director, Ministry of MSME, Government of India at the '2nd Global e-Summit-2020 Factoring & Bill Discounting', organized recently by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). According to Mr Mohanty, there are two major issues with the MSME sector today that is lack of credit and delayed payments. Both these factors are hampering with the availability of working capital. To solve this issue, we are discussing Factoring and bill discounting as a product to overcome the points that are lacking in the traditional system, he said. He explained that Factoring could play a major role in the export financing segment. But unless MSMEs gain confidence in factoring it is very difficult to practice it. At present, third party financial institutions are supporting export financials. So, we need to streamline this process that involves some credit guarantee or assurance to the industry which is the biggest hurdle in the path of practising Factoring primarily, he pointed out.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
