The Union Cabinet has cleared a proposal for setting up of a Rs. 500 crore Credit Guarantee Fund for Factoring for Micro Small and Medium Enterprises (MSME) units.
As per reports, the decision was taken at a Cabinet meeting chaired by Prime Minister Narendra Modi.
Factoring is a financing arrangement for suppliers by making prepayments against bills.
It provides liquidity to MSMEs and facilitates collection of receivables.
