India Factoring (India Factoring & Finance Solutions Pvt Ltd), a joint venture of the state-owned Punjab National Bank (PNB), along with Malta-based FIM Bank Group, Italy- based Banca IFIS, and Blend Financial Services, Mumbai, has launched Export factoring for entrepreneurs, small and medium enterprises (SMEs) and small-scale industries to provide much needed liquidity for their export business which is not linked to balance sheet.
Export factoring is a complete financial package for exporters that combines export working capital financing, credit protection; foreign accounts receivable ledger and collection services.
A factor is a specialized financial firm that performs financing through the purchase of invoices or accounts receivable.
In export factoring the factor, purchases the exporter's short-term foreign accounts receivable for cash at a discount from the face value, normally without recourse, and assumes the risk on the ability of the foreign buyer to pay, and handles collections of the receivables.
Thus, by virtually eliminating the risk of non payment by foreign buyers, factoring allows the exporter to offer open accounts, improves liquidity position, and boosts competitiveness in the global marketplace.
In the present economic crunch, India Factoring is facilitating domestic factoring solutions to more than 200 SMEs and SMIs from its seven offices based out of Delhi, Mumbai, Chennai, Bangalore, Kolkata, Ahmedabad, Hyderabad and Pune.
Export contributes approximately 17 to 18% to India's GDP.
This service will help to grow India's export industry as well as help India's SMEs and SMIs to manufacture more products where India Factoring will scrutinise the factoring requirement of SMEs and SMIs and address the needs of the small scale entrepreneurs in our country.
Sudeb Sarbadhikary, CEO of India Factoring, said: "India's Export rose 6.7% year on year in December 2011 to $ 25 billion and there is need for export factoring and other trade finance services to support exporters' liquidity."
"Many of our clients are looking for Factoring facility for their export business.. We are committed towards the development of factoring services which in turn will support growth and efficacy of Small & Medium Enterprises (SMEs). SMEs are the key growth driver for our country and contributes to more than 40% of the country's export."
According to Factors Chain International (A global association of Factoring Companies worldwide), factoring services worldwide has experienced a growth rate of 100% in the last five years.