Factoring is commonly identified as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing. Factoring service is a service that covers (i).Collection of bills, (ii).discounting of bills (iii).maintenance of accounts books in domestic and international trade. Factoring enables companies to sell their outstanding book debts for cash. They sell invoiced receivables at a discount…
Though financial transactions involved in ‘factoring’ and ‘forfaiting’ appears alike, these two terms are different in their nature, perception and scope. From the below table, let us find out the key difference between factoring and forfaiting; FACTORING FORFAITING Factoring is a financial arrangement whereby a supplier of goods sells its trade receivables to the factor…
International factoring usually has two factors viz. export factor and import factor. The export factor looks at financing the exporter and collection of account receivables. The import factor evaluates the importer in respect of collecting the dues in time and assessment of chances of default by the importer. The exporter on receipt of export order…
The term forfaiting refers to a form of trade finance involving discounting of export bills receivables such as drafts drawn under LC, bills of exchange, promissory notes, or other instruments on without recourse basis. The export of capital goods involves account receivables of medium and long term maturities. It is a general practice that the…
The major difference between wholesale banking and retail banking is in the type of clientele. Retail banking, also known as consumer banking, refers to the offering of banking services to individuals and lower-tier businesses. Services offered in retail banking related both on deposits as well as loans and advances. Deposit products avail retail customers are…
The National Bank of Agriculture and Rural Development (NABARD) was initially promoted by the Reserve Bank of India in 1982 under the National Bank of Agriculture and Rural Development Act 1981. By its establishment, NABARD substituted the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of the Reserve Bank of India, and…
The weaker sections of our society are the socially backward/ minority communities at national level or the people belonging to economically low income group. Normally, such people may not easily get timely and adequate credit without the priority credit dispensation of RBI. As per RBI’s priority sector approved plan, Banks have to achieve weaker section…
The definition of MSMEs revised from July 1, 2020, Please read the following post for latest amendment. New criteria for the classification of MSME effective from July 1, 2020 The new criteria supersede the following article (You may refer following article only for reference to old date details). The MSMED Act 2006 classifies Micro, Small…
Although, commercial banks and other financial institutions have been making steady strides to increase their share of credits to the MSE sector, but they have certain difficulties in sanctioning limits to SME borrowers. In an environment of NPA numbers in the banking sector alarmingly swelling, banks themselves are under stress and facing challenges to raise…
Following the ordinance empowering RBI to lay down the process of initiating steps under the Insolvency and Bankruptcy Code (IBC), an Internal Advisory Committee (IAC) is set up by RBI to oversee the specific steps that are initiated by bankers for resolution of a bad debt. In its first meeting on June 12, 2017, the…