On Tuesday, 27th July 2021. 2 bills were passed in a Day. The government passed two new bills amidst the chaos when the opposition party demanded a thorough investigation against Prime Minister Narendra Modi Pegasus Spyware Controversy.
The bills are:
- FACTORING REGULATION AMENDMENT BILL 2021.
- NATIONAL INSTITUTES OF FOOD, TECHNOLOGY and MANAGEMENT BILL 2021.
FACTORING REGULATION AMENDMENT BILL 2021.
The bill is an enhanced version of the Factory Regulation Act 2011.
The statements aim at:
- To broaden the scope of businesses that can smoothly engage in the Factoring Business.
- It will help the MSME’s (Micro, Small, Medium size Enterprises) in the availability of Working Capital.
- The bill will ensure smooth cash flow in the business and ease of company for MSME.
- Many clauses are based on UK SINHA COMMITTEE RECOMMENDATIONS.
What is FACTORING BUSINESS?
Factoring Business has got no relation to Factory. Let us understand what is ‘FACTORING’ with an example.
For instance, if an MSME entity or small business firm sells cement to an infrastructure company on credit.
The infrastructure company invoices a bill that 2lakh rupees will pay to the MSME entity after one year.
So basically, the business entity will receive the cash or cheque after one year; the business entity only has an Invoice bill from the infrastructure company.
Since the business entity cannot receive the amount, the other business activities are at a halt.
The businessman does not have enough personal finance to invest in the business entity.
The businessman will now go to a bank or an NBFC’s, and he will make a deal with the bank.
The bank will provide him with 1lakh 95 thousand rupees, and the bank will keep the invoice bill with them.
After one year, the bank will receive 2lakh rupees from the infrastructure company.
This whole process is known as FACTORING.
Rigid to initiate FACTORING because there were only 7 NBFC’s all over India that were allowed.
Through this bill, the government has announced that they will increase the number of NBFC’s so that the MSME can smoothly initiate FACTORING.
National Institutes of Food Technology, Entrepreneurship and Management Bill, 2021
Under the Ministry of Food Processing Industries, the two educational institutes became Institutions of National Importance (INI) through the bill.
- National Institute of Food Technology Entrepreneurship and Management (NIFTEM), Kundali (Haryana)
- Indian Institute of Food Processing Technology(IIFPT), Thanjavur (Tamil Nadu)
There are 130 institutes with the INSTITUTIONS OF NATIONAL IMPORTANCE Tag.
Some of the benefits that INIs are:
- Functional autonomy to enhance efficiency, quality and accountability.
- Increase funding from the government.
- Have a better quality of education.
- Enhanced Research Facilities.
- Swift decision making abilities.
- Minimal interference from the political executive.
- Scholarships to the students.
- Better sports facilities, seminars.
The parliament has passed both bills. It will become an ACT once the President approves and sign the account.