Factors finance upto 80% of the total invoice amount, and also follow up with the company's debtors for recovery of the trade debts. The charges incurred by companies include a service charge of 1.3% and discount on the advance amount which is approximately the same as bank lending rates.
Factoring services are being primarily provided by subsidiaries of the State Bank of India (SBI), Canara Bank(Canbank), Punjab National Bank and Allahabad Bank. These financial companies normally require credit rating of customers before providing the facility.
Centre for Monitoring Indian Economy, Bombay
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Last updated: May 1995.