On November 18, 2024, the International Financial Services Centres Authority (IFSCA) announced the "Registration of Factors and Registration of Assignment of Receivables Regulations, 2024." These regulations streamline the process for registering factors and filing assignment details, reinforcing India’s commitment to creating a robust international financial ecosystem.
Key Highlights of the Regulations
1. Purpose and Objectives
The new regulations aim to:
Provide a framework for granting certificates of registration to Factors.
Define the process for filing particulars of transactions with the Central Registry via the Trade Receivable Discounting System (TReDS).
2. Registration of Factors
Factors intending to operate in an IFSC must apply to the IFSCA for a certificate of registration. Conditions for eligibility include:
Possession of a certificate under the IFSCA (Finance Company) Regulations, 2021.
Experienced key managerial personnel and robust infrastructure.
Compliance with "fit and proper" standards, financial soundness, and freedom from judicial proceedings.
3. Registration of Assignment of Receivables
Factors financing trade receivables through TReDS must register details with the Central Registry within 10 days. Delays can be remedied by applying to the Central Registrar with valid reasons and applicable fees.
4. Conduct of Business
Factors may operate directly or via platforms like the International Trade Financing Services platform (ITFS).
Entities engaging in factoring must report their operations to the IFSCA at specified intervals.
Key Changes Introduced
Supersession of RBI Guidelines The new regulations override previous Reserve Bank of India guidelines, marking a transition to an IFSC-specific framework.
Repeal of Circulars The circular on “Guidelines on Factoring and Forfaiting of Receivables” issued in August 2021 stands repealed.
Savings Clause Actions undertaken under previous guidelines will continue to hold validity under the new regulations.
Importance of These Regulations
Enhance operational clarity for factors in IFSC.
Strengthen the legal framework for receivable assignments.
Encourage global trade financing opportunities through modern platforms like ITFS.
More Detailed Circular: International Financial Services Centres Authority
Disclaimer: This post is for informational purposes only and does not constitute professional advice. While efforts are made to ensure accuracy, we do not guarantee the completeness or reliability of the information provided. Any reliance is at your own risk. Consult professionals for specific advice.
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