Lok Sabha Debates Further Discussion On The Motion For Consideration Of The Regulation Of Factor ... on 21 December, 2011 > Title: Further discussion on the motion for consideration of the Regulation of Factor (Assignment of Receivables) Bill, 2011, moved by Shri Nano Narain Meena on 20th December, 2011 (Bill Passed). MR. CHAIRMAN : The House will now take up item no. 31. Shri B. Mahtab. SHRI BHARTRUHARI MAHTAB (CUTTACK): Mr. Chairman, Sir, I am on my legs today to speak on the Regulation of Factor (Assignment of Receivables) Bill, 2011 which was taken up yesterday. Many amendments have been moved to this Bill and specially the title has been changed to be called the Factoring Regulation Act, 2011. Sir, a number of suggestions were made by the Standing Committee. But the interesting aspect of this Bill is that this Bill has 35 clauses and I would deal with two clauses which have not been dealt with yesterday. The Minister has moved 23 amendments to this Bill. The clauses in the Bill are 35 and the amendments that have been moved are 23. That shows how much interest the Government has taken in framing of this Bill. Then there was another mistake that was pointed out relating to the verbatim Hindi translation of regulation of factor. Yesterday, when Shri Uday Singh was initiating the discussion, some hon. Members were asking him to speak in Hindi. The problem here is, the word ‘factoring’ also has been repeated in the Hindi translation of the Bill because the word ‘factoring’ has a different connotation when it is pronounced in Hindi. That is why that name has been changed. I think the Minister can explain that point also. … (Interruptions) अगर वे हिन्दी में करें तो उसका अलग अर्थ निकलता है। MR. CHAIRMAN : Mr. Mahtab, please address the Chair. SHRI BHARTRUHARI MAHTAB: I am sorry, Sir. The major problem of inadequacy of capital in a small scale or ancillary industrial undertakings is causing serious and endemic problems which are affecting the health of such undertakings. Therefore, it was felt that prompt payment of money by buyers should statutorily be ensured and mandatory provisions for payment of interest on the outstanding money in case of default should be made. This Bill is brought with a view to provide this and to regulate the payment of interest on delayed payment to small scale and ancillary industrial undertakings. An Act was enacted in 1993. The provision of the said Act had made it mandatory for the buyer to the small scale industry promptly failing which he is required to pay interest to the supplier… (Interruptions) MR. CHAIRMAN : Hon. Members, please maintain some decorum. Please do not disturb the House. SHRI BHARTRUHARI MAHTAB: However, this Act did not improve the situation of delayed payments and it was repealed by Micro, Small and Medium Enterprise Development Act 2006. This Act provided facilitating the promotion and development and enhancing competitiveness. This Act made provision for liability for buyer to make payment to the supplier, yet there were complaints regarding delay in payments to the micro or small industries. I am reminded that it was in 1998 that the Reserve Bank of India had constituted a Study Group under the Chairmanship of C.S. Kalyanasundaram to examine the feasibility and mechanics of starting factoring organisation in the country. This committee had noted that inadequacy of working capital finance with its liquidity problem has been one of the major stumbling blocks in running of small scale industries. It had recommended that the factoring for small scale industries could be mutually beneficial to both factors and small scale industrial units. I have some suggestions to make. Despite the factoring provision was stopped 20 years back, but invariably factoring was continuing, therefore, there was a requirement to regulate the factoring provision in our country. The Kalayanasundaram Committee had recommended that assignment of receivables in favour of factor be exempt from the stamp duty. The Standing Committee was also in agreement with this recommendation and the Government has considered this and therefore, there is a need today to bring in an amendment in the Indian Stamp Act 1889. This has not been done. They have brought it in here, but there is no amendment in the Indian Stamp Act 1889. So, I would like to understand from the hon. Minister that though they have exempted the provision as per the recommendation of the Standing Committee, is there a necessity to make certain amendments in the Stamp Act of 1889? The Bill does not include any provision on the amount of commission or discount charged by factors. Mr. Uday Singh was referring to