Mar 31, 2022

Registration of Factors (Reserve Bank) Regulations, 2022

RBI introduced the Registration of Factors (Reserve Bank) Regulations, 2022 (‘Regulations’) under the Factoring Regulation Act, 2011 (‘Factoring Act’) which are effective from January 17, 2022. The salient features of the Regulations are:

  1. Any entity which registers itself as a Non-Banking Financial Company – Factor (‘NBFC-Factor’) under the Regulations is required to ensure that its financial assets from the factoring business constitute at least 50% of its total assets, and its income derived from the factoring business is at least 50% of its gross income (‘Principal Business Criteria’); and
  2. Any existing Non-Banking Financial Company – Investment and Credit Company (‘NBFC-ICC’) can apply for registration as an NBFC-Factor if it complies with the eligibility criteria set out in the Regulations. Any existing NBFC-ICC which does not meet these criteria but intends to undertake factoring business can apply for conversion from NBFC-ICC to NBFC-Factor and has to comply with the Principal Business Criteria.




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