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Last updated: 2 October 2026
A non-banking company that wants to carry on factoring business as its principal business registers with the Reserve Bank of India as an NBFC-Factor under Section 3 of the Factoring Regulation Act, 2011. Expertvuw supports applicants with eligibility review, documentation, filing on RBI’s PRAVAAH portal and coordination until registration.
Factoring is the purchase of trade receivables, typically from MSME suppliers, against an advance and a fee. The Factoring Regulation Act, 2011 requires any non-bank factor to obtain a Certificate of Registration from the Reserve Bank under Section 3. The Factoring Regulation (Amendment) Act, 2021 widened the definition of receivables, introduced a statutory definition of the Trade Receivables Discounting System (TReDS), and allowed TReDS platforms to file assignment particulars with the Central Registry on behalf of factors.
Under RBI’s consolidated directions, an NBFC-Factor must keep at least 50% of its total assets in the factoring business and earn at least 50% of its gross income from it (Miscellaneous Directions, 2025, para 42). A new applicant needs a minimum Net Owned Fund of ₹10 crore under the Registration, Exemptions and Framework for Scale Based Regulation Directions, 2025.
Existing NBFC-ICCs with total assets of ₹1,000 crore or more may undertake factoring without converting, subject to RBI conditions; others may apply to convert to NBFC-Factor. Registered NBFC-Factors can participate as financiers on RBI-authorised TReDS platforms.
Expertvuw’s role is advisory, documentation and coordination. Auditor certifications are obtained through independent licensed professionals.
Based on the regulations and circulars referred to on this page. Last updated: 28 September 2026.
Certificate of Registration from RBI under Section 3 of the Factoring Regulation Act, 2011.
₹10 crore for new NBFC-Factor applicants (SBR Registration Directions, 2025, para 39).
NOF glide path of ₹7 crore by 31 March 2025 and ₹10 crore by 31 March 2027 (para 42).
At least 50% of total assets and 50% of gross income from factoring (Miscellaneous Directions, 2025, para 42).
NBFC-ICCs with total assets of ₹1,000 crore or more may undertake factoring (Miscellaneous Directions, para 37).
Factors register assignment particulars with the Central Registry; TReDS may file for them (Section 19, as amended 2021).
Factoring licences depend on showing that receivables finance will genuinely be the core business.
Plans that mix general lending with factoring may not meet the 50% asset and income test.
Weak processes for verifying invoices and debtor acknowledgement raise credit and fraud concerns in RBI review.
Missing Central Registry filings for assignments weaken the factor's position against competing claims.
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Review capital, object clause and planned asset mix against the factoring principal business test.
Align shareholding, board and capital infusion with the ₹10 crore NOF requirement.
Prepare the factoring business plan, projections and the board-approved policy set.
Upload the CoR application and supporting documents on RBI's PRAVAAH portal.
Respond to RBI observations and provide clarifications or additional documents as required.
On grant of CoR, set up Central Registry filing, CIMS returns and TReDS onboarding if planned.
A registered NBFC-Factor is regulated both under the Factoring Regulation Act and RBI’s NBFC directions.
Maintain at least 50% of assets and 50% of gross income from factoring business.
Register particulars of each assignment of receivables with the Central Registry under Section 19.
File applicable supervisory returns on CIMS, including the annual Statutory Auditor Certificate.
Keep NOF at or above the level applicable under the SBR Registration Directions, 2025.
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₹10 crore, under the Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025.
Financial assets in the factoring business must be at least 50% of total assets, and income from factoring must be at least 50% of gross income.
NBFC-ICCs with total assets of ₹1,000 crore or more, and meeting RBI’s other conditions, may undertake factoring. Others can approach RBI for conversion to NBFC-Factor.
Yes. Banks, NBFC-Factors and other financial institutions permitted by RBI can participate as financiers on TReDS platforms.
The Factoring Regulation (Amendment) Act, 2021 widened the definitions of factoring and receivables, defined TReDS, and allowed TReDS platforms to file assignment particulars with the Central Registry on behalf of factors.
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