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Overview:
The Reserve Bank of India (“RBI”) on 3rd April 2023 published the Master Circular-Bank Finance to Non-Banking Financial Companies (“NBFCs”) (“Master Circular”) to consolidate instructions issued up to 31st March 2023 on the matter.
Technical Details:
1) The Master Circular updates the eligibility provisions of “Non-Banking Financial Companies-Factors” (“NBFC-Factor”) and “Non-Banking Financial Companies-Investment and Credit Company” (“NBFC-ICCs”) (in accordance with the Registration of Factors (Reserve Bank) Regulations, 2022), for banks to extend financial assistance to support the factoring business.
2) In case of NBFC-Factors, in addition to the other criteria to avail bank finance, NBFC-Factors also needs to satisfy the following:
(a) 50% of their income must be derived from factoring activity;
(b) Receivables purchased / financed on ‘with recourse’ or ‘without recourse’ form atleast 50% of their assets; and
(c) The assets would not include the assets/income relating to any bill discounting facility extended by them.
For further details, please see:
<< Master Circular - Bank Finance to Non-Banking Financial Companies (NBFCs)>>
For any queries / clarifications, please feel free to ping us and we will be happy to chat:
● Mr. Ankit Sinha (ankit.sinha@jclex.com)
● Mr. Saurabh Sharma (saurabh.sharma@jclex.com)
● Ms. Rupul Jhanjee (rupul.jhanjee@jclex.com)