The Bill that seeks to open up factoring business to non-bank lenders was passed in the parliament.
The Bill will provide relief to micro, small and medium enterprises and help them, ensuring a smoother capital cycle and healthier cash flow.
The current law on factoring business was enacted in 2011.
It gave the Reserve Bank of India authority to allow non-bank finance companies to remain in factoring business only if it was their principal business.
That is, more than half of assets were to be deployed and income earned from factoring business.