MHP Exemption for Transfer of Receivables

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Summary:

The Reserve Bank of India (RBI) has exempted the transfer of receivables acquired as part of 'factoring business' from the Minimum Holding Period (MHP) requirement, subject to certain conditions. The conditions include: the residual maturity of the receivables should not be more than 90 days and the transferee conducts proper credit appraisal of the drawee before acquiring the receivables. This exemption aims to develop secondary market operations of receivables in factoring business. The amendment is effective from December 28, 2023, and all other provisions of the Master Direction u2013 Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021, continue to be applicable.