Special Mention Accounts

Special Mention Accounts are those assets/accounts that show symptoms of bad asset quality in the first 90 days itself. The Special Mention Account identification is an effort for early stress discovery of NBFC loans. It was introduced as a corrective action plan to contain stress. As per the SMA regulations, NBFC should identify potential stress in the account by creating a new sub-asset category viz. ‘Special Mention Accounts’ (SMA).

SMA Sub Category	Classification basis:
SMA-0	Principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress, Delay of 90 days or more in (a) submission of stock statement / other stipulated operating control statements or (b) credit monitoring or financial statements or (c) non-renewal of facilities based on audited financials.
SMA-1	Principal or interest payment overdue between 31- 60days.
SMA-2	Principal or interest payment overdue between 61-90 days.

SMA Sub Category:
SMA-0	Invoices due Upto 30 days from Due-Date.
SMA-1	Invoices due More than 30 days and upto 60 days from Due-Date.
SMA-2	Invoices due More than 60 days and upto 90 days from Due-Date.

Example: If due date of an Invoice is March 31, 2021, and full dues are not received before the lending institution runs the day-end process for this date, the date of overdue shall be March 31, 2021. If it continues to remain overdue, then this account shall get tagged as SMA-1 upon running day-end process on April 30, 2021 i.e. upon completion of 30 days of being continuously overdue. Accordingly, the date of SMA-1 classification for that account shall be April 30, 2021. Similarly, if the account continues to remain overdue, it shall get tagged as SMA-2 upon running day-end process on May 30, 2021 and if continues to remain overdue further, it shall get classified as NPA upon running day-end process on June 29, 2021.

NPA CLASSIFICATION

Below is the basis of Treating a Credit Facility as NPA.

1. An account is treated as NPA if it remains overdue and unpaid for 90 Days from due-date.

2. Also an account is treated as NPA if discount charges/other charges remain unpaid / not serviced in the account for more than 3 months

Because, CBF is a professionally managed company with the support of Canara Bank, a progressive commercial Bank in the Country. In a totally computerized environment, CBF is known for quick decisions and flexibility in meeting the requirements of its client. It is a profit making company.

Only where factorability is present, this facility is suitable. Factorization is not suitable in the following cases :

• where large volume of cash sales take place.
• engaged in speculative business.
• selling highly specialised capital equipments or made-to-order goods.
• where credit period offered to the buyers is more than 180 days.
• where there is Consignment Sale or ‘Sale or Return Arrangements’.
• where sales are to the sister / associated companies .
• where sales are to the public at large, etc.

While we appreciate your concern, we have to assure you that there is no scope for such misunderstanding once the concept of Factoring is well understood and the need for corporate co – operation is realised in the matter of maintaining the Production – Sales – Realisation cycle in a smooth manner. Factoring is gaining acceptance in our country as a normal progressive business service and is definitely a significant global trend today.

‘Recourse’ or ‘With recourse’ factoring – we provide you only financing but not credit cover. Should your customer fail to pay up, we will have recourse to you to get back the money advanced to you.

‘Non – recourse’ or ‘Without recourse’ – where credit cover is provided and in the event of failure of the customer to pay, the factor will bear the bad debt risk. However, in India, this is yet to be introduced.

Mainly, you should be in the line of Manufacturing or Trading or Services. You should have sound financial base and a turnover of not less than Rs. 50 lacs per annum. Your customer base should be strong and prompt in payment. ‘Factorability’ is the underlying principle to entertain a proposal.

We offer a professional service of very high order and our charges will be certainly comparable to that of banks. Considering our quality of services, quick decision and flexibility, you will find that our fees are very reasonable. If your credit rating is high and your customer base is strong, you stand to benefit in charges.

There are two types of charges – service charge and discount charge.

• Service charge is levied based on the work involved and services offered such as sales-ledger maintenance etc., calculated as a percentage of the gross value of invoices factored. It may vary from 0. 10 % to 1. 00 % depending on various factors. This is collected up-front from clients.
• Discount charges are levied towards providing instant credit to the client by way of prepayment. In this regard various aspects are taken into account, such as cost of funds, credit rating of the client, quality of transactions etc., while arriving at the rate. This is collected on monthly basis on the actual drawings by the client from his pre-payment account.
• We also collect nominal processing charge for the work relating to processing of the proposal.

Banks offer a package of financial facilities starting from Term Loan to working capital and others. Our product is mainly factoring – a credit facility designed to enhance your cashflow. We make an outright purchase of your debts and the financial rights to invoices. The formalities are very simple compared to that in banks. In a nutshell, we purchase your creditworthy accounts receivable at a reasonable discount and fund you with immediate cash upto an agreed percentage of the invoice value.

• We manage through our computerised system your sales-ledger and provide you the information periodically.
• We follow up with your customers and collect the debts, of course, with your assistance.
• We provide you credit / market information relating to your business etc., if required.

https://receptfritt-potensmedel.com

Banks offer a package of financial facilities starting from Term Loan to working capital and others. Our product is mainly factoring – a credit facility designed to enhance your cashflow. We make an outright purchase of your debts and the financial rights to invoices. The formalities are very simple compared to that in banks. In a nutshell, we purchase your creditworthy accounts receivable at a reasonable discount and fund you with immediate cash upto an agreed percentage of the invoice value.