Factoring in India

Presented by
Helna Benadict
Factoring
 Factoring is a financial service which involves an
outright sale of receivables of a firm to a financial
institution called factor which specializes in the
management of trade credit.

 The factor assumes credit risks associated with the

collection of accounts for which he charges a
commission usually a percentage of value of receivables
received called factorage.
Factoring in India
 In India , High powered committee constituted by RBI
under the chairmanship of C.S Kalyanasundaram has
recommended promotion of factoring organizations.

 Primary Target Markets – Small scale sector and

Export sector

 RBI amended Banking Regulation Act in 1991

permitting commercial banks to start separate
subsidiaries for rendering factoring services.
 First factoring company – started by SBI in 1991 – Factors
and Commercial Ltd (SBI Factors)

 CANBANK Factors started by Canara Bank – leads in

domestic market with 65%-70% of the share.

 SBI provides factoring services in western region while

Canara Bank concentrate on Southern and Northern regions.

 Both SBI and Canara Bank offers Recourse factoring.

 New entrants in market – ICICI, HSBC, Global Trade

Finance.

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Thank You…