SBI Factors, India’s largest factoring company, has partnered with fraud prevention specialist MonetaGo to strengthen security measures across its domestic and cross-border lending operations, as the country’s nascent factoring market shows signs of gradual expansion.
SBI Factors, a wholly-owned subsidiary of State Bank of India (SBI) and regulated by the Reserve Bank of India (RBI), began operations in April 1991 as India’s first factoring company. It will adopt MonetaGo’s Secure Financing system to bring additional and stronger fraud detection capabilities.
In recent years, India has been seeking to expand its relatively underdeveloped factoring sector to better support micro, small, and medium-sized enterprises (MSMEs). Whilst invoice discounting has grown in incidence over the past decade, there is still room for factoring to grow in India compared to other markets; only seven non-banking financial company (NBF) factors are currently registered with the RBI.
“I believe that going ahead, factoring will become successful in India with the right enablers,” Kalyan Basu, Managing Director of India at MonetaGo, told Trade Finance Global (TFG). “Advisors are also trying to tell the government that [these enablers] are necessary in making factoring a success.”
Whilst domestic factoring has gained some traction through platforms such as the Trade Receivables Discounting System (TReDS), cross-border factoring has yet to take off substantially, Basu noted. However, government initiatives suggest this could change, with the Directorate General of Foreign Trade (DGFT) examining ways to expand factoring as part of India’s broader export promotion strategy.
“It is critical to our customers’ businesses that lending through our solutions is subject to real-time fraud checks,” said Bharat Mishra, managing director and chief executive of SBI Factors. “MonetaGo is the leader in this space, and we are delighted to join their user community.”
MonetaGo’s technology addresses common fraud types, including duplicate financing, incorrect invoicing, and identity fraud. These methods of fraud are common in India’s counterparties as well as domestically.
“The proof-of-value confirmed the persistent threat of fraud in today’s factoring and trade lending environment,” said Neil Shonhard, chief executive of MonetaGo.
