IFSCA (RF and RAR) Regulations, 2024

On November 22, 2024, IFSCA has issued International Financial Services Centres Authority (Registration of Factors and Registration of Assignment of Receivables) Regulations, 2024. These regulations create a unified framework for registration and operations of Factors in IFSCs, replacing RBI-led guidelines. The objective of the regulations is to establish procedures for granting certificates of registration to Factors operating in IFSCs and filing details of receivables assignments through TReDS under the Factoring Regulation Act, 2011. The synopsis of the Regulation is as under:

Procedure for Grant of Certificate of Registration:

• Entities seeking to commence factoring business in IFSCs must apply to IFSCA, except those exempted under Section 5 of the Factoring Regulation Act, 2011.
• Certificates are granted subject to:
  1. Compliance with IFSCA (Finance Company) Regulations, 2021.
  2. Relevant experience of KMPs in factoring.
  3. Adequate infrastructure, financial soundness, and ‘fit and proper’ status of the Factor and its personnel.
  4. Absence of judicial proceedings against the Factor or KMPs for legal violations.

• Factors shall begin operations within six months of receiving the certificates.
• Certificates issued under previous regulations are deemed valid under the new framework.

Permitted Operations:

• Factors may operate:
  1. Directly with assignors.
  2. Through ITFS platforms, adhering to legal provisions.
• Eligible non-Factor entities may also undertake factoring via ITFS platforms.

Process of Registration of assignments of receivables transactions

• Filing by TReDS: – Assignments or satisfactions of receivables financed through TReDS must be filed with the Central Registry within ten days of the transaction.
• Filing includes:
  1. Details of receivables assigned to a Factor.
  2. Satisfaction of receivables upon realization.

• Central Registrar may allow additional time (up to 10 days) for late filings upon receiving an application with valid reasons and prescribed fees.

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