Tuesday, October 6, 2015

Export factoring on non-recourse basis

It has been decided to permit AD banks to factor the export receivables on a non-recourse basis subject to conditions as under:
  1. AD banks may take their own business decision to enter into export factoring arrangement on non-recourse basis. 
  2. In case the export financing has not been done by the Export Factor, the Export Factor may pass on the net value to the financing bank/ Institution after realising the export proceeds.
  3. AD bank, being the Export Factor, should have an arrangement with the Import Factor for credit evaluation & collection of payment.
  4. Notation should be made on the invoice that importer has to make payment to the Import Factor.
  5. After factoring, the Export Factor may close the export bills and report the same in the Export Data Processing and Monitoring System (EDPMS) of the Reserve Bank of India.
  6. In case of single factor, not involving Import Factor overseas, the Export Factor may obtain credit evaluation details from the correspondent bank abroad.
  7. KYC and due diligence on the exporter shall be ensured by the Export Factor.

Based on RBI Circular dt 16/07/15. Please visit www.rbi.org.in for any further clarification if required…..Poppy