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Canara Bank to sell stake in factoring unit

Canara Bank is proposing to sell its entire 70% stake in its subsidiary Canbank Factors. The bank may get around Rs 90 crore for the stake. Apart from Canara Bank, Andhra Bank holds 10% stake in the factoring company. The other shareholder is Sidbi. Canbank Factors reported a total business turnover of Rs2,498 crore in 2016-17 and incurred a loss of Rs39.8 crore due to provisioning for doubtful debts. Factoring, a leading source of funding mainly for small and medium enterprises, involves the sale of a company’s account receivables or invoices to a third party, a factoring company or a bank, at a discount. The buyer, in turn, does the recovery as and when the invoice matures.

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