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The Lok Sabha passed the Factoring Regulation (Amendment) Bill, 2021 aiming to liberalize the Factoring Regulation Act, 2011 by widening the scope of entities that can engage in factoring business.
A factoring business is a business where an entity (factor) acquires the receivables of another entity (assignor) for an amount. Receivables are the amount owed by the customers (debtors) to the assignor for the use of any goods, services, or facilities.
The New Bill was introduced in Lok Sabha on September 14, 2020. Thereafter it was referred to the Standing Committee on Finance on September 25, 2020 and the committee tabled the report in Lok Sabha on February 3, 2021.
The Bill was based on recommendations of UK Sinha Committee contemplating long-term measures for the economical and financial sustainability of the sector.
The Bill is further presented before the Rajya Sabha for consideration.
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