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RBI Certifies 121 Finance As NBFC-Factor After Revised Registration Of Factors Regulations

Modani believes that the recent developments in e-invoicing coupled with digital factoring will disrupt the entire transaction-based lending in the country which will eventually help in mitigating a lot of risk in lending

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The fintech firm 121 Finance has become India’s first NBFC-factor to receive the certificate of registration under registration of factors (Reserve Bank) regulations, 2022, the company said in a statement on Thursday.  

The statement said that the NBFC-factor addresses the most significant challenge most businesses suffer from, which is arranging short-term funds for micro, small, and medium enterprises (MSMEs) without any collateral.  

Until now, factoring was offered only to the large corporates, however, 121 Finance has brought factoring to the MSMEs and has its roots deep in FinTech. MSMEs are actively seeking alternate sources of Working Capital, especially since the banks are moving out of cash credit limits for small businesses. 

Ravi Modani, Founder and CEO, 121 Finance said, “Digital Factoring is the simplest, fastest, effectively lowest cost solution for Working Capital for any business, more so for MSMEs. With financial technologies and registration as an NBFC-Factor in place, we are strongly placed to reach annual disbursements of over Rs 500 crores by 2023."

Modani believes that the recent developments in e-invoicing coupled with digital factoring will disrupt the entire transaction-based lending in the country which will eventually help in mitigating a lot of risk in lending. 

“Revised Factoring regulations will also see a huge opportunity in the Fintech B2B lending space, with extremely competitive offerings. This will also give a lot of options to the businesses to choose from. With bigger NBFCs in play, the awareness of Factoring will increase amongst users, which will lead to the growth of the small business across the country,” added Modani. 

The firm is currently working on offering invoice verification using Blockchain technology and is developing algorithms using artificial intelligence (AI) and machine learning (ML) to enhance its credit coverage geographically. 

“Our vision for any business in India is to be able to sell on credit and 121 finance being able to manage the receivable and offer cash to the seller leveraging the latest financial technologies and make India the flag bearer in digital factoring,” said Modani.