Prime Bank has entered into an agreement with FCI in Dhaka, enabling the bank to carry out an international factoring operation with UniCredit Factoring Italy.
This operation, facilitated through FCI’s electronic data interchange platform, EDIFactoring 2.0, introduces international financing avenues for Bangladesh’s export sector, enhancing the scope for supply chain finance.
International factoring involves the purchase of an invoice from an exporter in one country by a factor, who later collects the amount from a buyer or importer in a different country.
Through this arrangement, the exporter is paid in advance by the factor, receiving a discounted amount on the invoice, with the repayment being secured from the amount paid by the buyer or importer on the invoice’s due date.
Factoring services can encompass bad debt protection, receivable collections, financing, and the management of receivables ledgers.
Aligned with the guidelines of the Bangladesh Bank, this initiative offers secure and efficient financing solutions to exporters, highlighting Prime Bank’s commitment to fostering economic growth and supporting local businesses.
Shams A Muhaimin, Deputy Managing Director of the bank, hailed the factoring transaction as a landmark deal for both Prime Bank and the local banking industry.
Muhaimin said, “The credit coverage model mitigates default risks for our exporters, often uninformed about buyer’s credit information due to limited access. Prime Bank can also serve as a gateway for other banks to factor their receivables, while aiding industries in enhancing capacity.”
Peter Mulroy, Secretary General of FCI, lauded the first factoring transaction in Bangladesh by Prime Bank under the two-factor model.
Mulroy said, “Factoring business will grow in Bangladesh as exemplified by Prime Bank and help the economy grow even faster.”
