Prime Bank executes international factoring transaction for FGS Denim

Prime Bank recently signed an agreement with Factors Chain International (FCI) in Dhaka under which the bank conducted an international factoring transaction for FGS Denim Wear, a concern of Fashion Globe Group.

The transaction, executed via FCI's EDI platform, edifactoring.com, paves the way for unlocking international funding for Bangladesh's export sector, offering vast opportunities for supply chain financing.

International factoring is the process of purchasing an invoice from an exporter in one country and collecting it later from a buyer or importer located in another country.

The exporter receives payment upfront from the factor by way of a discount against the invoice and the source of repayment comes from the proceeds paid by the buyer or importer at the due date of the invoice.

Factoring may include protection against bad debts, collection of receivables, financing and receivables ledger administration.

Compliant with the Bangladesh Bank's directives, this initiative provides secure and efficient financing to exporters, reflecting Prime Bank's dedication to economic growth and support for local enterprises.

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.

"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," he said.

Peter Mulroy, secretary general of FCI, lauded the first factoring transaction in Bangladesh by Prime Bank under the two-factor model.

"Factoring business will grow in Bangladesh as exemplified by Prime Bank and help the economy grow even faster," said Mulroy.

Among others, Md Nazmul Kabir, managing director of Fashion Globe Group, Prashanta Kumar Banerjee, professor at the Bangladesh Institute of Bank Management, and Mahbuba Ashraf, executive vice-president of transaction banking and head of diversity and inclusion of the bank, were also present.