1. It has been found that, in India factors usually take the bills for factoring, drawn on some selected drawee companies only. If this be the case, there is every likelihood that they will accept the bills for factoring mainly (or even solely) from the first class (â€˜Aâ€™ category companies, and from the cream of the â€˜Bâ€™ category companies, only; and would not accept any bill drawn on the â€˜Câ€™ or â€˜Dâ€™ category companies, or the lower level of even â€˜Bâ€™ category companies, where the recovery may be rather doubtful. On the other hand, the companies would not like to give the bills of the â€˜Aâ€™ category drawees, these being â€˜no riskâ€™ or â€˜low riskâ€™ clientele.
This, in turn, will result in a much lower level of factoring business taking place. Further, this will mean that the companies will also have to maintain their credit collection department side by side. These circumstances cannot be said to be conducive for the growth of the factoring business in India. Under these circumstances, what are your considered opinion and conducive suggestions, for making â€˜factoringâ€™ a gainful alternative arrangement for the companies?