MSME Receivable Finance Scheme

MSME Receivable Finance Scheme (MSME RFS)

MSME Receivable Finance Scheme (MSME RFS)

With a strong understanding of the significance of speedy receivables for the Financial Health of a Micro Small and Medium Enterprises (MSME), SIDBI offers MSME Receivable Finance Scheme (MSME RFS). This scheme helps mitigate the problem of delayed payments to MSME with respect to the credit sales to large purchaser companies by offering the finance against bills of exchange or Invoices arising out of such sales. In this article, we will look at MSME Receivable Finance Scheme (MSME RFS) in detail.

Objective

To mitigate the problems of delayed payments to a Micro Small and Medium Enterprises (MSME), in respect of the credit sales to large purchaser companies by offering the finance against bills of exchange or Invoices arising out of such sales.

The MSME Receivable Finance Scheme (MSME RFS) covers discounting of bills of exchange/- invoices arising out of the sale of indigenous components, sub-assemblies, parts accessories and intermediates by the MSME units. Services given by an enterprise in the services sectors (eligible service providers) to purchaser companies are also covered.

Benefits of MSME Receivable Finance Scheme

The MSME Receivable Finance Scheme (MSME RFS) helps the MSMEs in the following ways:

  • The quicker realisation of receivables
  • Discounting at competitive rates
  • Efficient cash management

Eligible customers

Limits are sanctioned to Well-performing large corporate, Purchaser Companies with sound financials for covering the purchases of the component, sub-assembly, parts, accessories and services obtained from the MSMEs.

MSME sellers for early realisation of dues from large Corporates by discounting the bills.

Eligibility Criteria

The eligibility criteria to obtain the benefit of MSME Receivable Finance Scheme (MSME RFS) is explained in detail below:

  • Either the Purchaser or Seller requires to qualify as SME (manufacturing/service sector unit).
  • Eligibility parameters include satisfactory financials such as Turnover, net worth, profit, positive cash flow, liquidity position, external or internal credit rating and security.

Methodology

MSME suppliers draw the Bills of Exchange on Purchaser companies against supplies made or services granted by them and the Bills of exchange are accepted by the Purchaser company.

Wherever The large Corporates do not provide bills of Exchange, discounting is made as per the agreed terms between the Corporate and SIDBI based on acceptance on the Invoices and proof of delivery challan / Goods Received Note.

Instruments of assistance

Bills of Exchange backed by Invoices and Invoices

Tenor

Usance of Bills of Exchange or Invoice not exceeding 90 – 180 days.

Quantum of assistance

Need-based. Not more than 50 crores in respect of eligible large purchaser corporates.

Validity of limit

Limits are sanctioned with validity for one year, with a half-yearly review and annual renewal.

Rate of Discount

Discount rates are linked to the internal/external credit rating of the MSME / large corporate.

External Rating Criteria

The Purchaser Corporates whose external rating are “AA-“ and above are only eligible for sanction of clean limit on merits.

MSME Receivable Finance Scheme (MSME RFS) Application Procedure

The application procedure for MSME Receivable Finance Scheme (MSME RFS) is explained in detail below:

Step 1: The eligible MSME enterprise needs to approach the concerned branch for applying for a loan.

Step 2: The applicant has to submit an application along with the required documents.

The application form for the MSME Receivable Finance Scheme (MSME RFS) et Worth Statement is enclosed here:

Annexure_Common-Loan-Application-form-with-formats-I-II-and-III-English-1-10-1-5

Step 3: After verifying the details, the SIDBI will sanction the loan and amount will be credited to the beneficiary’s accounts.  

Other Related Guides

Lean Manufacturing Competitiveness Scheme Lean Manufacturing Competitiveness SchemeThe Government of India (GoI) has upscaled the Lean Manufacturing Competitiveness Scheme (LMCS) for Micro, Sm...
Scheme for Incentive to Industries Scheme for Incentive to Industries The Scheme for Incentives to Industries is a Gujarat Government initiative that seeks to grant incentives to indus...

Post by Renu Suresh

Renu is experience content writer specialised in compliances and company rules.