CHAPTER 20 / 55 · Paid
FS-2.4 Factoring.
Purchase of receivables is not leasing and not credit finance.
Approx. 12 min with exercisesLaw cut-off: 20 September 2026Our approach
By the end of this chapter
- Describe the shop in one paragraph from the first file on the desk.
- Decide the promoter’s next asks: which stay on this letter, which need another paper.
- Keep neighbouring permissions off this desk.
- Cite the enabling section and treat the licence letter as the book.
FSC · FS-2.4 · Licence
1. FactorMU Ltd’s shop
FactorMU Ltd is the desk this chapter is for. Carry on factoring — typically the purchase of receivables — as a specialised financial service.
The first file on the desk is this. FactorMU Ltd will buy confirmed invoices of food wholesalers at a discount and collect from the supermarket. FS-2.4.
Three facts have to stay true of that book. First, the letter is the activity specified. This is a licence under Financial Services Act 2007, Section 14. A company name is not a permission.
Second, neighbouring papers stay off this desk. Not credit finance (FS-2.3), not leasing, and not a bank collecting its own loan book.
Third, the assumptions stay in the file. Fictional factor. True sale of receivables assumed for the teaching file. Cut-off 20 September 2026.
Financial Services Act 2007, Section 14. See the register note · Open the published text ↗.
2. A week with Buying supermarket invoices
Monday. The promoter walks in with “Buying supermarket invoices.” Write the facts before anyone names a code: FactorMU Ltd will buy confirmed invoices of food wholesalers at a discount and collect from the supermarket.
Tuesday. The team writes the activity in the words of the licence letter, not the brass plate. Carry on factoring — typically the purchase of receivables — as a specialised financial service.
Wednesday. They record what this permission is used for. FS-2.4.
Thursday. They write what the letter does not cover. Not a loan labelled as factoring, and not FS-2.3 merely because there is credit risk.
Friday. They lock the assumptions. Fictional factor. True sale of receivables assumed for the teaching file. Cut-off 20 September 2026. The file is ready for the application, not for a slogan on a slide.
The other files on this desk should look like that first one: a named person, a specified activity, and a letter that matches the work. That is what FS-2.4 is used for. The Act matters when FactorMU Ltd applies, when the Commission writes conditions onto the letter, and when the same promoter telephones with a different idea.
3. What the same promoter asks next
The facts are fictional. The method is the course: keep the shop you have just watched, and ask which desk is now doing the work.
This licence
Buying supermarket invoices
FactorMU Ltd will buy confirmed invoices of food wholesalers at a discount and collect from the supermarket.
Why it fits. FS-2.4.
Different paper
The same promoter asks for credit finance (FS-2.3)
The slide says the FS-2.4 letter already covers it because the same company, the same officers or the same client are on the file.
Why it does not. Keep the neighbouring paper off this desk. Not a loan labelled as factoring, and not FS-2.3 merely because there is credit risk.
Different paper
The same promoter asks for leasing
The slide says the FS-2.4 letter already covers it because the same company, the same officers or the same client are on the file.
Why it does not. Keep the neighbouring paper off this desk. Not a loan labelled as factoring, and not FS-2.3 merely because there is credit risk.
| The promoter asks FactorMU Ltd to… | This licence? | Why |
|---|---|---|
| Buying supermarket invoices | Yes | FS-2.4. |
| The same promoter asks for credit finance (FS-2.3) | No | Keep the neighbouring paper off this desk. Not a loan labelled as factoring, and not FS-2.3 merely because there is credit risk. |
| The same promoter asks for leasing | No | Keep the neighbouring paper off this desk. Not a loan labelled as factoring, and not FS-2.3 merely because there is credit risk. |
4. Papers that sit beside this one
Not credit finance (FS-2.3), not leasing, and not a bank collecting its own loan book. Name the other desk when the work changes: credit finance (FS-2.3); leasing; a bank collecting its own loan book.
- credit finance (FS-2.3)
- leasing
- a bank collecting its own loan book
Neighbouring codes have their own chapters. Do not import their books into this letter.
5. The letter and the file
A section 14 applicant with a receivables-purchase model, credit insurance if any, and concentration limits in the plan. Published licensing criteria on the FSC codified list (consolidation as at 1 July 2026) are guidance. Fees as at 1 July 2026: Processing fee Rs 25,000 (USD 1,000). Status at cut-off: Published specialised-financial-services category as at 1 July 2026.
Who may hold it. A section 14 applicant with a receivables-purchase model, credit insurance if any, and concentration limits in the plan.
Published criteria. Published licensing criteria on the FSC codified list (consolidation as at 1 July 2026) are guidance. They neither derogate from nor restrict the Commission’s statutory powers, and they must be read with the relevant Act, rules, codes and circulars. Dedicated FS-2.4 form and criteria on the directory.
Rules, codes and circulars. CL20260107 for fees.
6. How to cite FS-2.4
| Coordinate | As at 20 September 2026 |
|---|---|
| Directory code | FS-2.4 Factoring |
| Legal nature | Licence |
| Enabling law | Financial Services Act 2007 · Section 14 |
| Fees as at 1 July 2026 | Processing fee Rs 25,000 (USD 1,000). Fixed annual fee Rs 57,000 (USD 1,900). Unless the directory states a different conversion rule, USD figures apply only to an applicant for a Global Business Licence or a corporation holding a Global Business Licence. FSC Circular Letter CL20260107 (1 July 2026) records that the replacement fee schedule operates from 1 July 2026 and that annual fees are due by 30 September 2026. A circular does not rewrite the activity this code authorises. |
| Status at cut-off | Published specialised-financial-services category as at 1 July 2026. |
The structured library card keeps the same coordinates for search. Open FS-2.4 in the reference library.
FSC codified list of licences, authorisations, approvals, recognitions and registrations ↗Register noteFinancial Services Act 2007 ↗Register noteFSC licensing and fees amendment rules 2026 ↗Register noteFSC Circular Letter CL20260107 — review of fees and renewal of licences ↗Register noteFSC rules and regulations directory ↗Register note
PAUSE & REFLECT
Check your understanding.
Three questions to make the ideas stick. Your score is saved on this browser; this is a learning exercise, not a qualification.
Follow the sources.
Each title opens the published text. The register note records the edition used for this course.
- FSC codified list of licences, authorisations, approvals, recognitions and registrations ↗ All published category codes, fees, forms and licensing-criteria columns; consolidation as at 1 July 2026 · Register note
- Financial Services Act 2007 ↗ Sections 2, 14, 14A, 16–18, 25, 33, 71A, 72, 77, 77A, 77B, 77C, 78, 79A; Second Schedule Parts I–III; Fifth Schedule · Register note
- FSC licensing and fees amendment rules 2026 ↗ Rule 3 and replacement First Schedule; rule 4 commencement · Register note
- FSC Circular Letter CL20260107 — review of fees and renewal of licences ↗ 1 July 2026 fee review; annual-fee due date 30 September 2026; FSCOne alternative arrangements · Register note
- FSC rules and regulations directory ↗ Consolidated licensing and fees rules; sector-specific rules including Securities (Licensing) Rules and Family Office Rules · Register note
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