3. Registration of factors.—(1) No factor shall commence or carry on the factoring business unless it
obtains a certificate of registration from the Reserve Bank to commence or carry on the factoring business
under this Act.
(2) Every factor shall make an application for registration to the Reserve Bank in such form and
manner as it may specify:
3* * * * *
(3) Every applicant for grant of a certificate of a registration as a factor shall comply, for the purpose
of registration, with all the requirements to be fulfilled by an applicant for grant of certificate of
registration as non-banking financial company under the Reserve Bank of India Act, 1934 (2 of 1934) and
all the provisions of that Act, so far as they relate to the registration of non-banking financial companies,
shall (except those provided for under this Act) mutatis mutandis apply.
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[(4) The Reserve Bank may grant the certificate of registration in such manner as may be specified
by regulations.]
(5) Save as otherwise provided in this Act, every factor including factors not subject to requirement of
registration under section 5, shall be governed by the Reserve Bank of India Act, 1934 (2 of 1934), the
rules and regulations made thereunder and the directions or guidelines issued by the Reserve Bank, from
time to time.
4. Provisions of non-banking financial companies apply to factor.—-All provisions of Chapter
IIIB of the Reserve Bank of India Act, 1934 (2 of 1934) relating to non-banking financial companies
which have been granted a certificate of registration under sub-section (5) of section 45-IA of the Reserve
1. Subs. by Act 21 of 2021, s. 2, for clause (p) (w.e.f. 23-8-2021).
2. Ins. by s. 2, ibid. (w.e.f. 23-8-2021).
3. The proviso and Explanation omitted by Act 21 of 2021, s. 3 (w.e.f. 23-8-2021).
4. Subs. by s. 3, ibid., for sub-section (4) (w.e.f. 23-8-2021).
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Bank of India Act, 1934 shall (except those specifically provided for under this Act) mutatis mutandis
apply to a factor which has been granted a certificate of registration under section 3.
5. Recruitment for registration as a factor not to apply to bank or Statutory corporation or
Government company.—Nothing contained in section 3 shall apply to a bank or any corporation
established under an Act of Parliament or State Legislature, or a Government Company as defined under
section 617 of the Companies Act, 1956 (1 of 1956).
6. Powers of Reserve Bank to give directions and to collect information from factors.—(1) The
Reserve Bank may, at any time by general or special order, direct that every factor shall furnish to it, in
such form, at such intervals and within such time, such statements, information or particulars relating to
factoring business undertaken by the factor, as may be specified by the Reserve Bank from time to time.
(2) The Reserve Bank may, if it considers necessary in the interest of business enterprises availing
factoring services or in the interest of factors or interest of other stake holders give directions to the
factors either generally or to any factor in particular or group of factors in respect of any matters relating
to or connected with the factoring business undertaken by such factors.
(3) If any factor fails to comply with any direction given by the Reserve Bank under sub-section (2),
the Reserve Bank may prohibit such factor from undertaking the factoring business:
Provided that before prohibiting any factor from undertaking the factoring business, the factor shall
be given a reasonable opportunity of being heard.