Thursday, February 16, 2012

SBI Global Factors Ltd???

Factoring Services at SBI

After about two decades of existence, it is a sad development to note that the factoring subsidiary "SBI Global Factors Ltd" has accumulated losses of Rs. 125 crores and hence it may be merged with the parent.  Factoring services originated in Europe centuries ago but were introduced in India only in 1991 after the Kalyanasundaram Committee recommended for the same.  Even though it was envisaged to introduce four Factoring companies - sponsored by SBI in the West, PNB in the North, Allahabad Bank in the East and Canara Bank in the South, only two companies took birth ie., SBI Factors and Canbank Factors Ltd.

These companies were operating all over India, by opening branches in all potential places, some times overlapping in areas served and serving the Small and Medium Entrepreneurs in several ways besides financing against Invoices.  The captioned development is a retrograde step and is discouraging for the world of SMEs in India. We have got to wait and watch for the decision of the country's largest bank now.

No comments: