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JC - Legal Updates - Factoring Regulation (Amendment) Bill, 2021 gets parliamentary nod!

Legal Updates

31 Jul 2021

Factoring Regulation (Amendment) Bill, 2021 gets parliamentary nod!

Based on the recommendations of the Standing Committee on Finance, the Parliament of India has passed the Factoring Regulation (Amendment) Bill, 2021 (“Amendment”) which amends the Factoring Regulation Act, 2011 (“Act”).

The Amendment aims to resolve liquidity issues faced by micro, small and medium industries by, inter alia permitting all non-banking financial companies to engage in the business of factoring.

Other key highlights are as follows:

1)  The definition of ‘receivables’ has been amended to “the money owed by a debtor and not yet paid to the assignor for goods or services and includes payment of any sum, by whatever name called, required to be paid for the toll or for the use of any infrastructure facility or service”.

2)  The definition of ‘trade receivables discounting system’ has been inserted  as follows - “a payment system authorised by the Reserve Bank of India (the “RBI”) under Section 7 of the Payment and Settlement Systems Act, 2007 (51 of 2007) for the purpose of facilitating financing of trade receivables”.

3)  The existing time limit of 30 (thirty) days for registration of particulars of every transaction of assignment of receivables in favour of the factor with the Central Registry has been removed.

4)  Section 31A has been introduced in the Act to enable RBI to make regulations in relation to factoring.

https://prsindia.org/files/bills_acts/bills_parliament/Factoring%20Regulation%20Bill,%202020.pdf

For any further information, please contact Mr. Ankit Sinha (ankit.sinha@jclex.com), Mr. Saurabh Sharma (saurabh.sharma@jclex.com) or Ms.Teza Jose (teza.jose@jclex.com).