The Export Credit Guarantee Corporation of India (ECGC) will be offering direct factoring facility for micro, small and medium enterprises (MSMEs).
“We will be launching this service in the second quarter of the current financial year,” N Shankar, Chairman and Managing Director, ECGC, said, while speaking at the inaugural function of a branch premises here on Monday.
This would help small enterprises to meet their working capital requirements without approaching banks, he added.
Factoring is a cash management tool in which an enterprise/business person sells accounts receivable at a discount to a third party funding agency to raise capital.
Focus on MEMEs was vital for export promotion as they contribute about 40-50 per cent of total exports, the CMD said.
The corporation had recently introduced a new country-risk rating for the benefit of MSMEs.
ECGC, which has 62 branches now, would be opening three new branches in Chennai, Ahmedabad and Kollam soon. The gross premium collection of ECGC had gone up over 12 per cent to ₹1,305 crore in the year ended March 31, 2014, compared to the year-ago period, he added.
TS Vijayan, Chairman of Insurance Regulatory and Development Authority, formally inaugurated the branch premises and said there was a need for developing specialised insurance products for covering disasters and political risks.