CHENNAI: Nearly 13 lakh MSMEs in the state of Tamil Nadu will be benefitted with the adoption of a collateral-free working capital on M1xchange TReDS platform, India’s first and leading Trade Receivable Discounting System (TReDS).
The platform intends to offer early liquidity within 24-72 hours through its online bidding platform to Micro, Small and Medium Enterprises at a competitive rate in the state and offers a digital customer experience to MSMEs supported by a convenient and end-to-end digital process.
M1xchange has onboarded 49 banks and NBFCs and has recently signed a memorandum of understanding with Tamil Nadu government to enable TReDS. This will help MSMEs operating in the region get easy access to working, without any hard collateral or security and recourse to MSMEs.
As of October 31, 2022, M1xchange facilitated with bill discounting of more than Rs 36,000 cr to over 13,500 MSME suppliers spread across 1,200 towns from across the country.
However, in TN about 1,097 MSME sellers have registered on the platform and received Rs 775 cr against their invoices from August 2022 to October 2022 and a total of Rs 4,962.60 cr has been financed up till 31st October 2022. “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 use TReDS for receivables discounting from their corporate buyers at market-determined interest rates using an auction method in which multiple financial institutions bid. Corporate buyers in turn will be able to procure at better prices and manage their inventory adequately,” said a spokesperson from M1xchange.
M1xchange has also started testing of ‘Small-Small Factoring’ product under the Reserve Bank of India’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.