Total factoring turnover in India increased to US$1,427m in 2003, from US$1,367m the year before, according to the global industry group Factors Chain International (FCI).
Factoring in India has not lived up to its potential. One of the biggest problems for companies in the sector is the absence of a clear legal framework, as the obligations of the debtors (the purchasers of goods on credit) towards the factors are ambiguous and contradictory. The Factoring of Debts Due to Industrial and Commercial Undertakings Bill would improve the situation, but it had still not been presented to parliament as of July 2004 and does not seem high on the regulatory agenda.
SBI Factors and Commercial Services (promoted by the State Bank of India) became India’s first factoring company in 1991. Canbank Factors (a subsidiary of state-owned Canara Bank) followed in the same year.
