Hyderabad, Apr 22 (KNN) The Export Credit Guarantee Corporation of India (ECGC) will be providing direct factoring facility for micro, small and medium enterprises (MSMEs) to help meet their working capital requirements without having to approach banks.

Factoring is a financial management service in which a business sells its accounts receivable at a discount to a third party funding agency to raise capital.

Focus on MSMEs is vital for export promotion as they contribute about 40-50 per cent of total exports, said ECGC Chairman and Managing Director N Shankar said here yesterday, explaining the benefits that the service would provide to small entrepreneurs.

Earlier, the Reserve Bank of India (RBI) has proposed to dematerialise and discount the MSMEs bills through reverse factoring to address the problem of delayed payments to the sector from their large sized buyers. Such bills and invoices are traded in the secondary market, which needs to be developed.

ECGC had recently introduced a new country-risk rating for the benefit of MSMEs.

The gross premium collection of ECGC had gone up over 12 per cent to Rs 1,305 crore in the year ended March 2014, compared to the year-ago period, Shankar added.

In the meantime, the corporation is also likely to review its rating to Ukraine following the crisis in that country.

The managing director said the reviewing of rating will be done in a short time.

Ukraine is India's second-largest trading partner in the Commonwealth of Independent States (CIS) after Russia. In 2012-13, India's total trade with Ukraine was USD 3.18 billion, of which exports were USD 519 million and imports were USD 2.65 billion. 

ECGC determines export credit insurance premium on the basis of ranking from A to D, it allots to each country; the lower the ranking the higher the premium. 

However, Shankar said he do not want to guess about what the ranking would be for Ukraine before considering the latest situation. (KNN/ST)