**Executive Summary**
This document summarizes public comments and suggestions received on the draft IFSCA (Registration of Factors and Registration of Assignment of Receivables) Regulations, 2024, which was issued by IFSCA on August 30, 2024. The comments address various aspects of the draft regulations, including the treatment of NBFC Factors, the applicability of TREDS vs. ITFS, registration processes with CERSAI, and the role of IFSC Banking Units. No specific deadlines or action items for immediate implementation are mentioned.
**Key Points / Main Content**
* **NBFC Factors:**
* RBI-licensed NBFC Factors should receive similar beneficial treatment as banks, including regulatory oversight by the RBI.
* **TREDS vs. ITFS:**
* In IFSCA, TREDS should be replaced with ITFS, as TREDS is for domestic transactions only, while ITFS is for export transactions.
* **Registration with CERSAI:**
* Licensed Factors/Banks registered with IFSCA should be able to directly file with CERSAI, either on a whole turnover basis or at the invoice level, for selective assignment.
* The phrase "(at invoice level or whole turnover)" should be added after the word "transaction" in relevant clauses related to registration.
* **Filing of Assignment Particulars:**
* The manner of filing particulars of assignment of receivables in transactions with the Central Registry (i.e., CERSAI) should include filing by licensed Factors/Banks, or by a Trade Receivable Discounting System.
* **IFSC Banking Units (IBUs):**
* IFSC Banking Units (IBUs) should be excluded from approval requirements as they are branches of banks.
* **International Trade Finance Service (ITFS):**
* Registration of "Trade Finance Units" factored through ITFS should also be registered with the Central Registry by the concerned ITFS on behalf of the Factor, as per prescribed timelines.
* **Charges for Delay in Registration:**
* The charges for delay in registration by ITFS (TReDS) should be borne by respective platforms and not by Banks.
* **Reference Circular:**
* If a circular titled 'Guidelines on factoring and Forfaiting of receivables" is going to be repealed, then which circular needs to be referred to.
**Impact Analysis**
**Stakeholder: RBI-licensed NBFC Factors**
* **Impact:** Increased regulatory oversight.
* **Action Required:** Comply with RBI regulations.
**Stakeholder: Factors operating in IFSCA**
* **Impact:** Expanded opportunities for registering assignments and expanded the definition of assignments that can be registered.
* **Action Required:** Adapt registration processes to accommodate invoice-level filing and ITFS integration.
**Stakeholder: Trade Receivable Discounting Systems (TREDS/ITFS)**
* **Impact:** Requirement to register "Trade Finance Units" factored through ITFS with Central Registry.
* **Action Required:** Establish registration processes and potentially bear the costs for registration delays.
**Stakeholder: IFSC Banking Units (IBUs)**
* **Impact:** Exemption from approval requirements.
* **Action Required:** No direct action required, benefit from reduced regulatory burden.
Key Entities Referenced
IFSCA (Registration of Factors and Registration of Assignment of Receivables) Regulations, 2024: Draft regulations under review, concerning the registration of factors and assignment of receivables by the International Financial Services Centres Authority.
IFSCA: International Financial Services Centres Authority, the issuing authority of the draft regulations being commented on.
RBI: Reserve Bank of India, referenced in comparison to the regulation of NBFC Factors.
CERSAI: Central Registry of Securitisation Asset Reconstruction and Security Interest of India; a registry that licensed factors/banks registered with IFSCA can directly file with.
TREDS: Trade Receivable Discounting System, referenced as an alternative to ITFS and a means of filing with the Central Registry.
Public Comments on Draft IFSCA (Registration of Factors and Registration of
Assignment of Receivables) Regulations, 2024
The consultation paper seeking comments/suggestions from the public on the draft IFSCA
(Registration of Factors and Registration of Assignment of Receivables) Regulations, 2024
was issued by IFSCA on August 30, 2024. The following comments/suggestions were
received:
S.No Page No. Re Sub- Comments/Suggestions/ Rationale
(1) of Draft g Regul Suggested (6)
Regulati No ation modifications
on (2) . No./ (5)
(3) Para
No.
(4)
1 4 4 1 RBI licensed NBFC Factor NBFC Factor is
should also be accorded regulated by RBI.
similar beneficial treatment
as provided to the Bank.
2 5 6 1 In IFSCA, should this be TREDS is for domestic
ITFS? TREDS is for only. Whereas ITFS is
domestic only. It is for export.
proposed that the words
TREDS be replaced with
ITFS.
3 5 6 Following Point to be To give option to the
included as Point No.2 factor to file registration
(and accordingly sub- directly with CERSAI
regulation nos. be either on whole turnover
modified, under resulting basis of invoice level.
Point No.3 i.e. sub- The invoice level
regulation 1 & 2): registration will enable
the factors to undertake
- Licensed Factors / selective assignment
Banks registered also.
with IFSCA can
directly file with the
central registry
(CERSAI), either on
whole turnover
(between buyer-
seller) or at invoice
level.4 6 6 4 The phrase (at invoice Same as above.
level or whole turnover)’
be added after the word
‘transaction’.
i.e. The sentence shall be
read as Every Form for
registration of any
transaction (at invoice
level or whole turnover)
relating to assignment of
receivables or satisfaction
of receivables on
5 1 4 b Existing Point 4. (b)
Lay down the manner of
filing of particulars of
assignment of
receivables in such
transactions with the
Central Registry, by a
Trade Receivable
Discounting System
(TReDS), registered
with the Authority, on
behalf of Factors.
Proposed Point 4. (b)
Lay down the manner of
filing of particulars of
assignment of
receivables in such
transactions with the
Central Registry, i.e.
CERSAI by the licensed
Factor / Banks or by a
Trade Receivable
Discounting System
(TReDS), registered
6 2 4 4.1 Addition of “IFSC Banking IBUs are branches of
with the Authority, on
units (IBUs)” in the banks and accordingly,
behalf of Factors.
exclusion list approval should not be
required for IBUs.
7 3 6 6.1 Addition of “International Registration of “Trade
Trade Finance Service” or Finance Units” factored
“ITFS” along with through ITFS should
“TReDS”. also be registered with
Central Registry by the
concerned ITFS on
behalf of the Factor, as
per timelines
prescribed.8 4 6 6.2 The charges for delay in No rationale provided.
registration by ITFS
(TReDS) should be borne
by respective platforms
and not by Banks
9 4 7 7.2 If circular titled No rationale provided.
‘Guidelines on factoring
and Forfaiting of
receivables” is going to be
repealed, which circular
needs to be referred for
factoring and forfaiting in
in GIFT City