Pune, Oct 21: SBI Factors and Commercial Services Ltd is all set to nearly double its turnover this year to Rs 900 crore. Last year its turnover was Rs 461 crore. SBI Factors managing director S Banga said the company's business will get a boost if it can introduce `without recourse factoring'. SBI Factors has been trying to get insurance cover but the national insurance companies are unable to come out with proper schemes or specific rates. Non-availability of credit insurance necessary for without recourse factoring was hindering the growth of factoring in the domestic market.
The total Indian factoring market is placed at around Rs 1400 crore and this could reach the Rs 6000-crore mark if factoring companies could offer without recourse factory. Now they are trying to re-insure with foreign companies but if the new insurance bill comes into force it could open up new avenues for SBI Factors, Banga said.
Banga said a committee had been set up by the government to examine various legislative changes needed for smooth operations of factoring companies in India. However, the draft legislation does not cover the whole industry and is restricted to the SSI sector. Banga is hoping the legislation would be able to cover the entire industry as the large scale sector accounts for 70 per cent of the factoring business in India. Banks and industry too were reluctant offer letter of disclaimer and letter of notification respectively to prospective clients, Banga said. This affects business in the small scale sector. Nearly 39 per cent of SI's clientele belonged to the SSI category and enjoyed about 28 per cent of the total limits sanctioned.
Meanwhile, SBI Factors has reported a steady half-yearly performance. Factoring turnover of SBI as on September 1999 was Rs 249.80 crore while profit before tax was 3.16 crore. Outstanding prepayments at Rs 86.19 crore. Banga said business would pick up in the second half especially the last quarter.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.