MHP Exemption for Transfer of Receivables by banks

RBI vide circular dated December 28, 2023, In order to develop secondary market operations of receivables acquired as part of ‘factoring business’ as defined under the Factoring Regulation Act, 2011, has decided that transfer of receivables by eligible transferors will be exempted from Minimum Holding Period requirement, subject to fulfilment of the following conditions:

1. The residual maturity of such receivables, at the time of transfer, should not be more than 90 days, and;
2. As specified under clauses 10 and 35 of these directions, the transferee conducts proper credit appraisal of the drawee of the bill, before acquiring such receivables.