Equipment Refinance

Hire Purchase

Working Capital Term
Loan Scheme

Short Term Loan

Foreign Currency Loan &
Brand Equity

Merchant Banking

Equipment Lease Finance

Regional Offices

This Scheme has been currently discontinued

FACTORING

 Factoring is a financial service designed to help firms to arrange their receivable better. Under a typical factoring arrangement a factor collects the accounts on due dates, effects payments to the firm on these dates and also assumes the credit risks associated with the collection of the accounts.

 Sometimes the factor provides an advance against the values of receivable taken over by it. In such cases factoring serves as a source of short-term finance for the firm.

 In order to provide a gamut of financial services under one roof, Corporation has also started factoring services. Under the scheme Corporation shall be at the time being only providing advances or prepayments against receivable and other services provided by the factor such as debt collection and administration of sales ledger etc. shall be taken later on.

Under the scheme receivables only arising out of domestic trade shall be considered for factoring. Supplier/Borrower shall draw bills of exchange for goods supplied and the purchaser shall accept that. After acceptance of bills of exchange, Corporation shall make prepayment of 80% of invoice value after deducting its discount charges @ 17% to 18% p.a. for period of bill of exchange to supplier. Balance payment of 20% of the invoice value shall be made after collecting the payment from purchaser. If purchaser fails to pay the due amount on due dates, the supplier shall make the payment. Borrower/ Supplier shall submit Bill of Exchange alongwith invoice LR/RR receipts. Suppliers to be eligible for factoring must have minimum track record of 03 years with consistent profitability and minimum net worth of Rs. 25.00 lacs.

Usually before providing advance payments to supplier an agreement is entered with supplier for arising debts of purchaser to Corporation and Corporation make advances only against invoices drawn to this particular purchaser. Sub-limit of each purchaser is fixed and sum of these sub limits is over all limit of supplier. Usually purchaser should have been dealing with supplier for minimum period of two years. Maximum limit of each purchaser should not exceed Rs. 25.00 Lacs at a time.

Usually limit for factoring is calculated on the basis of the projected receivables on credit sales of the company and deducting existing bills/books debts limits enjoyed by the company from bank. Maximum limit shall not exceed two months average turnover of the supplier as per last audited balance sheet or projected turnover of current year subject to maximum of Rs. 100.00 Lacs.