The new non-recourse 'maturity factoring' facility offered by the Export Credit Guarantee Corporation of India Ltd (ECGC) to banks will not disturb the existing system of banking arrangement vis-a-vis exporters.
Talking to Business Line here recently on the various features of this new scheme, offered on an experimental basis, Mr R.V. Ajwani, regional head of ECGC, said a key benefit for banks is that they would be able to finance against the factored bills at zero risk, as they would be protected even in cases where non-payment is on account of a dispute between the exporter and the buyer.
The supplier (exporter) assigns his accounts receivables in favour of the factor and gives notice of the assignment to the debtor.
Mr Ajwani clarified that as the discounting of the bill under the scheme is to be done by the exporters' bank, they would not face any hassle in adjusting advances granted at the packing credit stage.
