Ludhiana, October 27, 2022 (News Team): Nearly 1.6 lakhs of MSMEs in the state of Punjab will be benefitted with the adoption of a collateral-free unique product known as ‘TReDS by M1xchange, India’s first and leading Trade Receivable Discounting System (TReDS). This product is intended to offer early liquidity within 24-72 hours through its online platform to Micro, Small and Medium Enterprises (MSMEs) sellers in the state and offers a world-class customer experience to MSMEs supported by a convenient and end-to-end digital process.This is a highly effective and efficient solution for over USD 250 million credit gap for MSMEs in India.
TReDS is an innovative system conceived and regulated by RBI that enables financing to Micro, Small & Medium Enterprises (MSMEs) at competitive rates to address the challenges of delayed payments to MSMEs. Invoices raised by MSMEs accepted by corporate buyers are funded at market-determined interest rates using an auction method in which multiple financial institutions bid. This also helps businesses to pay off their MSME debts in time.
M1xchange, known for its trade receivable platform is supporting the growing number of Micro, Small & Medium Enterprises across the country including. The Micro, Small, and Medium Enterprises sector accounts for the major share in the number of industrial units, and output in the manufacturing sector. This sector is also a major employment provider next only to agriculture and therefore, the need for vitalizing this sector assumes greater importance.
MSMEs are the backbone of the Indian economy and M1xchange with an end-to-end digital process has discounted invoices of over 13000 MSMEs spread over 1200 towns totalling to over Rupees 35,000 crores. TReDS enables financial inclusion of MSMEs on high scale, digitally and with a positive social impact. This financing is without any hard collateral or security and without recourse to MSMEs.
“The cost of funding outside the banking system is very high for MSMEs. With this unique proposition developed by M1xchange TReDS, MSME enterprises will be able to utilise TReDS for receivables discounting from their corporate Buyers. Corporate buyers in turn will be able to procure at better prices and manage their inventory adequately,” said Vishal Verma, Dy. Vice President, M1xchange.
M1xchange has started testing of ‘Small-Small Factoring’ product under the Reserve Bank of India’s (RBI’s) third cohort of the regulatory sandbox. The product aims at facilitating ‘early liquidity’ for MSME buyers and sellers. Once fully rolled out, the product is likely to help address over $750-billion credit gap for MSMEs in India.