The India International Financial Services Centres Authority has issued a circular setting the framework for capital relief and prudential requirements for factoring transactions by Finance Companies. It allows Finance Companies that obtain credit protection for factoring transactions through credit insurance or guarantees from eligible institutions in the International Financial Services Centre to benefit from capital relief, subject to the circular’s conditions and in alignment with the Basel III framework. The framework also permits capital relief for factoring transactions carried out under the two-factor model, including arrangements such as those facilitated by the FCI network. In addition, it introduces prudential requirements for Finance Companies engaged in factoring, including exposure norms and non-performing asset recognition, and provides relaxed asset classification norms for Finance Companies with a total asset base of less than USD 150 million.
India International Financial Services Centres Authority2026-07-21
India International Financial Services Centres Authority issues factoring framework with Basel III capital relief and relaxed norms for firms under USD 150 million
The India International Financial Services Centres Authority has issued a circular on capital relief and prudential requirements for factoring transactions by Finance Companies. It allows Basel III-aligned capital relief for eligible credit protection, including under the two-factor model, and sets exposure and non-performing asset rules. The circular also relaxes asset classification norms for firms with total assets below USD 150 million.