2. Interest on Delayed Payments to Small Scale and
Ancillary Industrial Undertakings Act,1993
Micro Small and Medium Enterprises Act, 2006
3. Any company can commence Factoring by obtaining
registration from the RBI as a non-banking finance
company
Banks or corporations established under an Act of
Parliament can also undertake factoring without being
required to obtain registration from RBI. Thus,
organisations like NHB, SIDBI, EXIM Bank can also
undertake factoring
Definition of factoring also includes assignment of export
receivables and thus includes 'forfaiting', subject to the
requirements of the Foreign Exchange Management Act
4. The law applies to all business entities i.e. large,
medium, small and micro entities, whether
engaged in any manufacturing activity or trading
or providing any services or in any other business
activity
Factors are declared to be credit institutions for
the purposes of Credit Information Companies
(Regulation) Act, 2005 and can have access to
credit information relating to firms availing
factoring services
5. Factors are not financial institutions for the purposes of
SARFAESI Act and hence will not have rights of
enforcement without the intervention of courts
The most important provision in the Act is insertion of
section 8D in the Indian Stamp Act, 1899, granting
exemption from stamp duty on documents executed for the
purpose of assignment of receivables in favour of Factors
notwithstanding anything to the contrary contained in any
other law in force. In view of such exemption, assignment
of receivables in favour of Factors becomes a viable
proposition and is expected to give a boost to factoring
6. Factors are not financial institutions for the purposes of
SARFAESI Act and hence will not have rights of
enforcement without the intervention of courts
The most important provision in the Act is insertion of
section 8D in the Indian Stamp Act, 1899, granting
exemption from stamp duty on documents executed for the
purpose of assignment of receivables in favour of Factors
notwithstanding anything to the contrary contained in any
other law in force. In view of such exemption, assignment
of receivables in favour of Factors becomes a viable
proposition and is expected to give a boost to factoring
