private financing facilitation

[br945]

there is a system available in the market for helping those small entreprenuers who may not get credit or bill discounting facilities from banks.
they have to always offer credit to buyers, to sell their goods. This puts a strain on their finances.

Under the practice available in the market, the small manufacturer (seller) draws Bill of Exchange on the buyer who accepts it, for the value of goods supplied and payabe after say 60 -90 days.
The buyer is suppoed to pay the amount on due date to a third party whose name is mentioned in the Bill of Exchange.

On the strength of this, the third party gives funds to the seller (minus his interest or commission) and collects the money directly from the buyer on due date.

Does the above arrangement fall within any existing regulations? can one start doing this without any formalities?

any knowledgeable advice appreciated.

[vsaiyar]

Bill of exchange is known in India as Hundis.  The discounting of Hundis is very much prevalent in India and is a recognised method of financing.  Banks too when bills are discounted follow the same methodology and there is no ban on discounting of bills either by the banks or by private parties.

[br945]

but isnt it subject to the Moneylending Act of 2014 as far as Maharashtra is concerned? and perhaps other state laws if practiced in such states?