{"id":17339,"date":"2020-10-05T11:32:28","date_gmt":"2020-10-05T06:02:28","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=17339"},"modified":"2020-10-06T12:02:52","modified_gmt":"2020-10-06T06:32:52","slug":"factoring-regulations-amendment-bill-2020-introduced-in-lok-sabha","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/factoring-regulations-amendment-bill-2020-introduced-in-lok-sabha\/","title":{"rendered":"Factoring Regulations (Amendment) Bill, 2020 Introduced in Lok Sabha"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Factoring Regulations (Amendment) Bill, 2020 was introduced in the lower house of the parliament on September 14. The bill aims to make significant changes in the Factoring Regulation Act, 2011. It focuses on widening access to credit for businesses seeking funds to ensure uninterrupted growth. In this article we described about Factoring Regulations (Amendment) Bill, 2020 Introduced in Lok Sabha.<\/p>\n\n\n\n<p>As per the said Act, the factoring business is referred to as a business where an entity (regarded as a factor) obtains the receivables of another entity (recognized as assignor) for a specific amount. Receivable is referred to as a total amount that is owed by the customers.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"686\" height=\"453\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-8.png\" alt=\"Factoring Regulations Bill 2020\" class=\"wp-image-17340\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-8.png 686w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-8-300x198.png 300w\" sizes=\"(max-width: 686px) 100vw, 686px\" \/><\/figure><\/div>\n\n\n\n<p>The factor can either referred to as a bank, company registered under company bank, or non-banking financial company. Keep in mind that facilities rendered by the financial institutions against the receivables are not regarded as factoring business.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/factoring-regulations-amendment-bill-2020-introduced-in-lok-sabha\/#Change_in_the_Definition_of_the_Receivables\" >Change in the Definition of the Receivables<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/factoring-regulations-amendment-bill-2020-introduced-in-lok-sabha\/#Modification_of_the_term_%E2%80%9CAssignment%E2%80%9D\" >Modification of the term \u201cAssignment\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/factoring-regulations-amendment-bill-2020-introduced-in-lok-sabha\/#Modification_of_the_term_%E2%80%9CFactoring_Business%E2%80%9D\" >Modification of the term \u201cFactoring Business\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/factoring-regulations-amendment-bill-2020-introduced-in-lok-sabha\/#Registration_of_Factors\" >Registration of Factors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/factoring-regulations-amendment-bill-2020-introduced-in-lok-sabha\/#Registration_of_Transactions\" >Registration of Transactions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/factoring-regulations-amendment-bill-2020-introduced-in-lok-sabha\/#Empowering_Reserve_Bank_to_make_Regulations\" >Empowering Reserve Bank to make\nRegulations&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/factoring-regulations-amendment-bill-2020-introduced-in-lok-sabha\/#Conclusion\" >Conclusion&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Change_in_the_Definition_of_the_Receivables\"><\/span>Change in the Definition of the Receivables<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the act, the receivable is defined as the monetary amount, which is a legal right of an individual under an agreement. This right may be accruing, existing, or conditional from the use of the services. The bill amends this definition to mean any amount of money owed by the customers (regarded as debtor) to the client (assignor) for the use of services or facilities.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Modification_of_the_term_%E2%80%9CAssignment%E2%80%9D\"><\/span>Modification of the term \u201cAssignment\u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Act expresses &#8220;assignment&#8221; as transfers of an interest (undivided) related to the assignor in any the bill amends this definition and states that receivables are regarded as the amount owed by the customers (the debtor) to the client (assignor) for the use of the facilities and services.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Modification_of_the_term_%E2%80%9CFactoring_Business%E2%80%9D\"><\/span>Modification of the term \u201cFactoring Business\u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>&#8220;Factoring business&#8221; implies the business related to the acquisition of receivables of assignor by taking an assignment of such financing, whether through credit or advances or otherwise related to a security interest over any receivables but does not enclose credit facilities rendered by a financial institute in the course of business against receivable&#8217;s security.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Registration_of_Factors\"><\/span>Registration of Factors<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Legal approval of the Reserve bank is compulsory to conduct a factoring business in the country. With that said, no company is liable to pursue such a business until and unless they obtain the registration for the same from the Reserve bank. For <a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFC<\/strong><\/a> to get into factoring business, its: (i) financial assets must exist in factoring business, and (ii) income generated from such a business ought to more than fifty percent of net income or more than the limit as notified by the Reserve Bank. The bill discards this limit of a non-banking financial company.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Registration_of_Transactions\"><\/span>Registration of Transactions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per Factoring Regulations (Amendment) Bill, factors are\nliable to register all the transaction details related to receivable\u2019s\nassignment in their favour. These details need to be spared in Central Registry\nSetup under SARFAESI Act, 2002, within thirty days. Any failure in this regard\nwould attract a penalty up to Rs 5000\/day till the default continues to remain\nin existence. The bill removes this time frame. The bill states that the\nregulations related to the period, payment fees, registration procedure, and\nlate fee may be specified later.&nbsp;<\/p>\n\n\n\n<p>Bill also adds that if the <strong>Trade Receivables Discounting System (TReDS<\/strong><sup><a href=\"https:\/\/m.rbi.org.in\/scripts\/FAQView.aspx?Id=132\"><strong>[1]<\/strong><\/a><\/sup><strong>) <\/strong>is used for financing the trade receivable, then the transaction-related details ought to be filed with the Central registry by the relevant TReDS, on behalf of the factor.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Empowering_Reserve_Bank_to_make_Regulations\"><\/span>Empowering Reserve Bank to make\nRegulations&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Bill grant the right to Reserve Bank to prepares the\nregulations for:&nbsp;<\/p>\n\n\n\n<ul><li>The procedure for granting registration certificate to a factor<\/li><li>The procedure of submitting transaction details with the Central Registry related to transaction done via TReDS<\/li><li>Other related concerns.&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Factoring Regulations (Amendment) Bill aims to support micro, small, and medium companies by rendering avenues for the credit facility, especially via Trade Receivables Discounting System. The increment in the resources of working capital may attract the growth for small scale entities and also ramp up employment in the country.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/farmer-bill-2020-highlights-benefits-and-limitations\/\">Farmer Bill, 2020 \u2013 Highlights, Benefits, and Limitations<\/a><\/mark><\/p>\n\n\n<a href=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/Factoring-Regulation-Bill-2020.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">Factoring-Regulation-Bill-2020<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Factoring Regulations (Amendment) Bill, 2020 was introduced in the lower house of the parliament on September 14. The bill aims to make significant changes in the Factoring Regulation Act, 2011. It focuses on widening access to credit for businesses seeking funds to ensure uninterrupted growth. In this article we described about Factoring Regulations (Amendment) [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":17351,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[484],"tags":[1065],"acf":{"service_id":"387"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":6115,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17339"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=17339"}],"version-history":[{"count":11,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17339\/revisions"}],"predecessor-version":[{"id":17430,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17339\/revisions\/17430"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/17351"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=17339"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=17339"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=17339"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}