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What is bill discounting

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Question: Case based question, Answer the following 3 partsa.

Praveen Steel Trading Company Ltd. has a substantial amount of funds locked up inSundry Debtors. It currently has a Bill Discounting Facility from Axis Bank which is also fully used up. Despite requests to Axis Bank to provide an adhoc Bill Discounting Facility, (tohelp the company release the amount locked up in Debtors), the company has not been granted any additional facility, with the result that the company's operations are nowgetting affected as working capital is stuck up in Debtors.

It has now approached SBI Factors Ltd. (subsidiary of SBI) to help in the release of fundsstuck up in Debtors through Factoring of the bills stuck up in Debtors. After due deliberation and discussion with the representatives of SBI Faptors and the company, itwas decided to keep this decision of Factoring in abeyance, as the company was mulling other options.Since the terms for the Factoring were very stringent, the company now decided to approach HDFC Bank for Forfaiting the bills. Even Forfaiting was not acceptable to thecompany and hence they decided to mull other options, other than Factoring and Forfaiting.

What is Bill Discounting? How is it different from Factoring? (Illustrate your answer)b. How is Forfaiting different from Factoring? (Illustrate your answer)c. After not being satisfied with the above two methods of Bill Discounting, thecompany is now looking for other options. What in your opinion can be the other

OPTION/S to help release the funds locked up in Sundry Debtors? Explain with anillustration.

Reference no: EM133115678

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