MUMBAI, May 1: SBI Factors, a subsidiary of State Bank of India, has sought exemption from the prudential norm of limiting exposure to one corporate to 15 per cent of the net owned funds (NOF) prescribed by Reserve Bank of India (RBI) for Non Banking Financial Companies (NBFCs).

SBI Factors and Commercial Services Limited, also a subsidiary of State Bank of India, has contended that the norm shackles its ambitious plan of marketing factoring service to mid-sized corporates as its maximum exposure to a corporate cannot be more than Rs 4.5 crore, which is 15 per cent of the NOF of Rs 30 crore.

"We have told RBI that we are ready to report business exposure in excess of the norms in order to have a level playing field with banks," SBI Factors managing director, K Sankaranarayanan told PTI in an interview.

Banks, which have been permitted to do factoring, have a greater edge over NBFCs given that they (banks) have no restrictions on raising resources and also allowed to have exposure limit upto 25 per cent of the NOF, he said. Sankaranarayanan said the regulatory dichotomy for NBFCs and banks as far as factoring is concerned should be done away with.

He said SBI Factors is all set to enter export factoring and has arranged a line of credit in foreign currency equivalent of Rs 15 crore from SBI's London and New York offices.

Meanwhile, Sankaranarayanan said SBI Factors recorded impressive financial results during 1996-97 with a 45 per cent jump in operating profits though its turnover remained at previous year's level of rs 440 crore.

Sankaranarayanan said once SBI Factors sets into export factoring, it would approach RBI for permission to make a foray into import factoring also since many corporates were soliciting this financial service.

He said SBI Factors was able to maintain its turnover despite adverse market conditions for the financial sector as a whole since offtake of credit was very poor.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.