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Business EconomyPosted at: Jul 17 2015 6:47PM


Factoring to be viable post-shipment finance alternative: FIEO Chief

Hyderabad, July 17 (UNI): Factoring will now be a viable post-shipment finance alternative, FIEO President Mr S C Ralthan said here today. In a statement, Mr Ralhan stated that while the factoring was introduced way back in 2001 but made little headway subsequent to the Factoring Act of 2011, which did away with stamp duty allowing banks to undertake factoring business without any requirement for registration. However, factoring as a post-shipment financing alternative did not move forward since it was on a “with recourse” basis. FIEO Chief also stated that with Factoring now becoming “without recourse” and without any subsequent liabilities but the immediate collateral export factoring will open up more avenues of finance over and above traditional financing from banks [as RBI’s Master circular on Loans and Advances restricted factoring prohibiting banks – from purchase of bills drawn otherwise than under a letter of credit on a “without recourse” and not treating it as “a true sale for assignor”]. Similarly, IRDA‘s notification of September 27, 2010, demanding differential treatment being given to the same preventing all General insurance ompanies to sell credit insurance to the Banks and NBFCs would also be inconsequential now, he added. UNI KNR KVV 1845
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