The Factoring Regulation Act, 2011
Administered Ministry: Ministry of Finance / Department of Financial Services
Act details
| Short title | The Factoring Regulation Act, 2011 |
|---|---|
| Long title | An Act to provide for and regulate assignment of receivables by making provision for registration there for and rights and obligations of parties to contract for assignment of receivables and for matters connected therewith or incidental thereto. |
| Act number | 12 of 2012 |
| Act year | 2012 |
| Enactment date | 22 Jan 2012 |
| Ministry | Ministry of Finance / Department of Financial Services |
| Department | Department of Financial Services |
| Jurisdiction | Central (Parliament of India) |
| Sections | 36 |
| Schedules | 1 |
| Status | Not repealed |
| Last checked on India Code | 29 Oct 2026 |
| Source | India Code, Government of India |
Legislative history
Legislative History: The Factoring Regulation Act, 2011
Short Title The Factoring Regulation Act, 2011
Act Number / Year Act No. 12 of 2012
Act ID (India Code) 201212
Presidential Assent Date January 22, 2012
Enforcement Date February 1, 2012 (and April 2, 2012 for specific sections)
Nodal Ministry Ministry of Finance
Precedent & Statutory Rationale
1. Working Capital Bottlenecks for MSMEs:
o Prior to 2012, micro, small, and medium enterprises (MSMEs) frequently suffered from severe liquidity crunches and working capital delays caused by extended payment cycles from commercial purchasers, impacting their operational viability.
2. Lack of Legal Clarity on Assignment of Receivables:
o The absence of a formal legal framework for the assignment of receivables, multi-agency registration mechanisms, and clear rights and obligations of factors, assignors, and debtors constrained the growth of the domestic factoring industry.
3. Fulfilling Recommendations of Expert Committees:
o The legislation was enacted following comprehensive recommendations by expert panels (such as the Kalyankrishnan Committee and the Standing Committee on Finance) to institutionalize factoring as an effective tool for trade finance and prompt liquidity realization.
Parliamentary Trajectory & Enactment
• Formulation: Developed and piloted by the Department of Financial Services within the Ministry of Finance to establish a robust regulatory framework for factoring and assignment of receivables.
• Parliamentary Passage: Introduced in Parliament in March 2011, examined in detail by the Parliamentary Standing Committee on Finance, and subsequently passed by both Houses of Parliament.
• Presidential Assent: Received formal Presidential Assent on January 22, 2012, entering the statute book as Act No. 12 of 2012.
Enforcement: Enforced on February 1, 2012 (and April 2, 2012 for specific sections)
• Source: India Code and Ministry of Finance Official Records