Call to introduce int'l factoring

FE Report

Experts at a workshop on Monday called for introducing international factoring in Bangladesh to help boost the country's export earnings.

They said a suitable policy, availability of fund and cultures related to the financial practices are essential for international factoring.

Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable to a third party.

The experts came up with the view at the inaugural ceremony of an international workshop on factoring, jointly organised by the Bangladesh Institute of Bank Management (BIBM) and the Factors Chain International (FCI) with the support of Bangladesh Bank (BB) at a city hotel.

BB Deputy Governor Ahmed Jamal attended the session as chief guest while Syed Mahbubur Rahman, chairman of the Association of Bankers Bangladesh (ABB) and CEO and Managing Director of Dhaka Bank Limited, was the guest of honor.

FCI Secretary General Peter Mulroy, the BIBM Director General (DG) and BB Executive Director Md Nazimuddin, and BIBM Director Prashanta Kumar Banerjee spoke on the occasion, among others.

Speaking on the occasion, Syed Mahbubur Rahman said factoring companies play a significant role in financing economic activities.

Traditionally, it is the SME that got the most benefits, but now many companies use factoring for flexible finance growth, he added.

"However, international factoring is a must need service for the companies engaged in the import and export of goods and service," he said.

Companies engaged in international trade irrespective of their size and industry often face a demand from the importers for an account trade and longer payment terms, the ABB chairman said, adding: "This is where the international factoring comes in."

In his speech, Peter Mulroy said there is growing interest and need for factoring in Bangladesh. "We have been speaking with the banks and NBFIs here over the past few years and we see huge potential for factoring in the market," he said.

On the sidelines of the event, Mr. Prashanta Kumar Banerjee told the FE that a core committee and a technical committee have been preparing a guideline for introducing the international factoring in Bangladesh.

"The issue International factoring has been included in the new export policy (2018-2021)," he said, adding that once introduced, it will help boost the country's exports and imports.

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