Page 16 - Banking Finance September 2021

ROUNDUP

The decision will be implemented vides mostly credit linked financial as- volved for crediting the amount,
through an executive order and will not sistance (capital subsidy) in the form of sources close to the development said.
require any legal amendment. grants-in-aid to entrepreneurs for set- PFRDA has also now said that the ex-

All the three entities who have submit- ting up of food processing or preserva- isting charge structure for 'instant
tion units. "These sanctioned projects
ted EoI (expression of interest) have bank account verification' should be
are estimated to benefit about 34 lakh
foreign investment. Anil Agarwal's recovered by CRA from the subscribers
farmers on completion," the Ministry
Vedanta, through an SPV with its Lon- for further reimbursement to the ser-
stated.
don-based parent Vedanta Resources, vice provider.
Apollo Management and Think Gas,
have submitted EoIss for acquiring the PFRDA advises CRA to Factoring Regulation
government's 52.98% stake in BPCL. implement 'instant bank (Amendment) Bill passed

Centre aims to setup two a/c verification' The Lok Sabha passed the Factoring
Regulation (Amendment) Bill 2020 that
lakh micro-food processing Pension regulator PFRDA has advised
the Central Record Keeping Agency seeks to widen the scope of entities
units (CRAs) to implement the process of 'in- that can engage in factoring business.
The Food Processing Ministry said that it stant bank account verification' for the The Bill will pave the way for non-NBFC
is implementing a Centrally-sponsored benefit of National Pension System factors and other entities to undertake
scheme with an outlay of Rs. 10,000 (NPS) subscribers at the time of pro- factoring activities.
crore to encourage setting up or cessing their exit/withdrawal request. Moving the Bill for passage in the lower
upgradation of two lakh micro-food pro- CRAs have been asked to adopt the house, Finance Minister Nirmala
cessing enterprises. The scheme is being "penny drop" process that involves cred- Sitharaman said that the government
implemented from 2020-21 to 2024-25. iting the bank account of a beneficiary has accepted all the recommendations
Minister of State for Food Processing with a token amount of say Rs. 1 and of the Standing Committee of Finance,
Prahlad Singh Patel informed the matching the name in the bank account which had submitted its report on Feb-
RajyaSabha in a written reply that the numbers with the Permanent Retire- ruary 3 this year.
Central Scheme-PM Formalisation of ment Account Number (PRAN) based on She said the Standing Committee had
Micro Food Processing Enterprises the penny drop response. This will be an recommended about eight changes,
Scheme (PMFME) provides financial, enhanced due diligence under the exit/ including one legislative change and all
technical and business support for withdrawal process of NPS. For this pur- have been accepted by the govern-
these enterprises. "The enterprises pose, CRAs would have to integrate ment.
can be set up or upgraded through their IT system and exit framework with
credit-linked subsidy during five years the fintech service providers, the Pen- It may be recalled that the Factoring
from 2020-21 to 2024-25," he added. sion Fund Regulatory & Development Regulation (amendment) Bill 2020 was
introduced in the Lok Sabha in Septem-
He added that the Ministry has so far Authority (PFRDA) has said. ber last year and the purpose of the
approved 41 mega food parks, 353 Hitherto, the CRAs were asking the proposed amendments was to
cold chain projects, 63 agro processing banks to verify the account of the ben- liberalise the restrictive provisions in
clusters, 292 food processing units, 63 eficiary and then convey their status. the Act and at the same time ensure
creation of backward & forward link- This was seen to be a time consuming that a strong regulatory/oversight
ages projects & 6 operation green exercise as the amount will be pro- mechanism is in place through the
projects across the country. cessed for crediting into the savings Reserve Bank of India.
This has been approved under the vari- bank account (SBA) of the beneficiary Factoring is a transaction where an
ous component schemes of Pradhan only after getting the response from entity (like MSMEs) 'sells' its receiv-
MantriKisan SAMPADA Yojana, which the bank.
ables (dues from a customer) to a third
is being implemented since 2016-17. Now, as per the new advisory, the veri- party ( a 'factor' like a bank or NBFC)
Under these component schemes of fication will be done at the CRA's end for immediate funds (partial or full).
PMKSY, Food Processing Ministry pro- itself, thereby reducing the time in- Currently, seven non-bank finance

16 | 2021 | SEPTEMBER | BANKING FINANCE