The major issue which MSME's face are reccovry of thir rceivables. This creates cash crunch. To help SME's from the same, SIDBI has depitcted Refinance Scheme.
-Quicker realization of receivables.
-Discounting at competitive rates.
- Efficient Cash Management.
How does it work?
SIDBI offers finance against bills of exchange / Invoices arising out of such sales to the MSME's
What is the Scope of Coverage?
The scheme covers discounting of bills of exchange/invoices arising out of sale of indigenous components / parts / sub-assemblies /accessories /intermediates by an MSME unit.
Services provided by an enterprise in the services sector (eligible service provider) to a Purchaser Company are also covered.
Description of Transactions under the Scheme
i. Limits are sanctioned to:
(a) Well-performing Large Corporates / Purchaser Companies with sound financials for covering their purchases of components / sub-assemblies / parts / accessories and services obtained from MSMEs
(b) MSME sellers for early realization of dues from large Corporates by discounting the bills
ii. MSME suppliers draw Bills of Exchange on Purchaser companies against supplies made/ services provided by them and the Bills of Exchange are accepted by the Purchaser companies.
iii. Wherever Bill of Exchange is not furnished by the large Corporates, based on acceptance on the Invoices and proof of delivery challan/ Goods Received Note, discounting is made as per agreed terms between the Corporates and SIDBI.
iv. These Bills/ Invoices are discounted by SIDBI within the sanctioned limit and payment effected (after deducting the applicable discount / retaining the retention margin) directly by way of RTGS / NEFT to the working capital account of the MSME supplier/ service provider.
On the due date, the Purchaser makes payment to SIDBI either through RTGS or by cheque. The limits are reviewed / renewed every year.
Who is Eligible for this scheme?
- Either the Seller or the Purchaser needs to Qualify as SME (manufacturing/service sector unit.)
- SMEs engaged in manufacturing / undertaking job works relating to sale of Components / Parts / Sub-assemblies / Accessories/Intermediates /Services etc. to Medium and Large Scale Units;
- Large Corporates procuring raw materials from MSMEs.