Latest news with #TradeReceivablesDiscountingSystem
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Business Standard
11 hours ago
- Business
- Business Standard
TReDS platform M1xchage eyes IPO in 3-5 years, aims ₹1.25 trn biz in FY25
M1xchage, a leading RBI-licensed Trade Receivables Discounting System (TReDS) platform, which is witnessing an 80-90 per cent annual growth in business, is planning to go public in the next 3-5 years. "Although the company has been profitable for the last two years, the initial public offering (IPO) is still a few years away. We would look at an IPO in 3-5 years, depending on market conditions," M1xchange Chief Executive Officer Sundeep Mohindru told PTI. M1xchage, which started operations in 2017, is aiming to close the financial year with a business of Rs 1.25 trillion. Factoring as a business is picking up very well as it is win-win for the banks, buyers and sellers, he said, adding that the business has been witnessing a growth of 80-90 per cent on an annual basis. During the current financial year, he said the business is expected to reach Rs 1.25 trillion. Last year, the volume was to the tune of Rs 78,000 crore as compared to Rs 43,000 crore in FY24. The platform is facilitating invoice financing of nearly Rs 10,000 crore each month, enabling MSMEs with faster access to working capital and driving adoption across corporates, vendors, and financial institutions. India's supply chain finance sector is witnessing accelerated growth, driven by the need for faster-working capital access for MSMEs and digital transformation across industries. With the Reserve Bank of India's (RBI's) TReDS framework, digital platforms are increasingly becoming the backbone of MSME financing, he said. The platform facilitates discounting of invoices and bills of exchange, or trade receivables of micro, small and medium enterprises from corporate and other buyers, through multiple financiers such as banks and non-bank entities. Factoring or invoice discounting refers to transfer in ownership or financing of accounts by a third party or factor at a discount for commission and fees, wherein the factor makes a profit upon the settlement of the debt. About funding for business growth, Mohindru said the company is well capitalised at the moment to drive exponential growth. Recently, growth-stage investment firm Filter Capital invested about $10 million (Rs 85 crore) in trade receivables discounting system platform M1xchange. Prior to this, Jindal Stainless, leading stainless steel manufacturer, along with its wholly owned subsidiary, Jindal Stainless Steelway Ltd, acquired a 9.62 per cent stake in M1xchange. This deal involved a combination of primary capital and a secondary purchase of shares from existing shareholders. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Economic Times
11 hours ago
- Business
- Economic Times
TReDS platform M1xchage plans IPO in 3-5 years
M1xchage, a leading RBI-licensed Trade Receivables Discounting System (TReDS) platform, which is witnessing an 80-90 per cent annual growth in business, is planning to go public in the next 3-5 years. ADVERTISEMENT "Although the company has been profitable for the last two years, the initial public offering (IPO) is still a few years away. We would look at an IPO in 3-5 years, depending on market conditions," M1xchange Chief Executive Officer Sundeep Mohindru told PTI. M1xchage, which started operations in 2017, is aiming to close the financial year with a business of Rs 1.25 lakh crore. Factoring as a business is picking up very well as it is win-win for the banks, buyers and sellers, he said, adding that the business has been witnessing a growth of 80-90 per cent on an annual basis. During the current financial year, he said the business is expected to reach Rs 1.25 lakh crore. Last year, the volume was to the tune of Rs 78,000 crore as compared to Rs 43,000 crore in FY24. The platform is facilitating invoice financing of nearly Rs 10,000 crore each month, enabling MSMEs with faster access to working capital and driving adoption across corporates, vendors, and financial institutions. ADVERTISEMENT India's supply chain finance sector is witnessing accelerated growth, driven by the need for faster-working capital access for MSMEs and digital transformation across industries. With the Reserve Bank of India's (RBI's) TReDS framework, digital platforms are increasingly becoming the backbone of MSME financing, he said. ADVERTISEMENT The platform facilitates discounting of invoices and bills of exchange, or trade receivables of micro, small and medium enterprises from corporate and other buyers, through multiple financiers such as banks and non-bank entities. Factoring or invoice discounting refers to transfer in ownership or financing of accounts by a third party or factor at a discount for commission and fees, wherein the factor makes a profit upon the settlement of the debt. ADVERTISEMENT About funding for business growth, Mohindru said the company is well capitalised at the moment to drive exponential growth. Recently, growth-stage investment firm Filter Capital invested about USD 10 million (Rs 85 crore) in trade receivables discounting system platform M1xchange. ADVERTISEMENT Prior to this, Jindal Stainless, leading stainless steel manufacturer, along with its wholly owned subsidiary, Jindal Stainless Steelway Ltd, acquired a 9.62 per cent stake in M1xchange. This deal involved a combination of primary capital and a secondary purchase of shares from existing shareholders. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
11 hours ago
- Business
- Time of India
TReDS platform M1xchage plans IPO in 3-5 years
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel M1xchage, a leading RBI-licensed Trade Receivables Discounting System (TReDS) platform, which is witnessing an 80-90 per cent annual growth in business, is planning to go public in the next 3-5 years."Although the company has been profitable for the last two years, the initial public offering (IPO) is still a few years away. We would look at an IPO in 3-5 years, depending on market conditions," M1xchange Chief Executive Officer Sundeep Mohindru told PTI.M1xchage, which started operations in 2017, is aiming to close the financial year with a business of Rs 1.25 lakh as a business is picking up very well as it is win-win for the banks, buyers and sellers, he said, adding that the business has been witnessing a growth of 80-90 per cent on an annual the current financial year, he said the business is expected to reach Rs 1.25 lakh crore. Last year, the volume was to the tune of Rs 78,000 crore as compared to Rs 43,000 crore in platform is facilitating invoice financing of nearly Rs 10,000 crore each month, enabling MSMEs with faster access to working capital and driving adoption across corporates, vendors, and financial supply chain finance sector is witnessing accelerated growth, driven by the need for faster-working capital access for MSMEs and digital transformation across the Reserve Bank of India's (RBI's) TReDS framework, digital platforms are increasingly becoming the backbone of MSME financing, he platform facilitates discounting of invoices and bills of exchange, or trade receivables of micro, small and medium enterprises from corporate and other buyers, through multiple financiers such as banks and non-bank or invoice discounting refers to transfer in ownership or financing of accounts by a third party or factor at a discount for commission and fees, wherein the factor makes a profit upon the settlement of the funding for business growth, Mohindru said the company is well capitalised at the moment to drive exponential growth-stage investment firm Filter Capital invested about USD 10 million (Rs 85 crore) in trade receivables discounting system platform to this, Jindal Stainless, leading stainless steel manufacturer, along with its wholly owned subsidiary, Jindal Stainless Steelway Ltd, acquired a 9.62 per cent stake in deal involved a combination of primary capital and a secondary purchase of shares from existing shareholders.
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Business Standard
7 days ago
- Business
- Business Standard
Signs bright for MSME sector as lending and financial stability improve
The TransUnion CIBIL and SIDBI MSME Pulse report for May has it that in FY25 credit to the sector stood at ₹35.2 trillion, up 13 per cent year-on-year. The quality of the book also improved: overall balance-level delinquencies (measured as 90-720 days-past-due, a reference to cases where the account is not current and classified as sub-standard) was at its lowest level in the last five years at 1.79 per cent, an improvement of 35 basis points. This last aspect must be read along with the support extended under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to motivate lenders to step up lending, albeit with proper underwriting and credit-monitoring mechanisms. In FY25, there were more than 2.7 million beneficiaries with guarantees extended at ₹3.06 trillion, a growth of 51 per cent over the previous financial year — the highest in CGTMSE's history. The stronger scaffolding — both by way of fiscal support and government policy initiatives — is being hooked into by players to step up their game. On the ride Take Bank of Baroda (BoB): it has set up more than 350 specialised MSME branches with experienced relationship managers, product specialists and service teams; these branches are well positioned to strengthen delivery across the bank's network. 'These are in high-potential pin codes and strategically mapped to the branch network to ensure greater reach, sharper service delivery, and stronger last-mile credit access,' says Beena Vaheed, BoB's executive director (ED). Take another initiative which is paying off big time: TreDS, short for Trade Receivables Discounting System, an online platform that enables MSMEs to access working capital by discounting their invoices to financiers, primarily through an auction mechanism. TReDS has grown to over ₹2,33,000 crore in FY25 from around ₹950 crore in FY18, notes an impact study by the Receivables Exchange of India (RXIL) in partnership with the Indian Institute of Management Bangalore (IIM Bangalore). The presence of multiple financiers and the auctioning mechanism has reduced the interest burden (on buyers and sellers) on the platform. There has also been a considerable improvement in the participation of MSMEs with women entrepreneurs or senior women executives, with their share increasing to 7,406 companies (40 per cent) from 14 firms (10 per cent) during FY18-24. Can TReDS be fine-tuned? As Ketan Gaikwad of RXIL sees it, integration with other digital infrastructure such as government e-marketplace, Goods and Services Tax (GST) network, e-invoicing, and the account aggregator framework can further streamline processes, reduce fraud, and lower transaction costs. 'Regulatory support to encourage mandatory participation of large buyers and government enterprises, and perhaps even incentive schemes for timely payments can significantly boost the ecosystem's health and ensure MSMEs receive their dues efficiently,' says the managing director (MD) and chief executive officer (CEO) of RXIL. There are pain points in TReDs though. A significant share of registered participants is not active and has no processed transactions, suggesting a need to identify the potential causes behind their inactivity. Most MSMEs cited a breakdown in their trading relationships either due to pausing sales to buyers or their buyers becoming insolvent as the main cause for inactivity. A few MSMEs also mentioned that they were engaging in direct transactions with buyers, benefiting from a faster payment period of 15-20 days. A case is now being made to extend the Credit Guarantee Fund Scheme for Factoring under National Credit Guarantee Trustee Company Limited to cover invoices. Doing so would enable factoring companies and banks to accept bills drawn on smaller or lower-rated buyers, facilitating greater inclusion. Over time, as transaction histories develop, the need for guarantees may diminish, allowing financiers to rely on established credit records. Formal business Finance apart, what's missed in the MSME plot is the importance of formalisation. This was highlighted by J Swaminathan, deputy governor of the Reserve Bank of India (RBI), on November 16 last year. He said many MSMEs operate informally, 'making it challenging for lenders to assess their creditworthiness due to information asymmetry, particularly regarding their financial performance.' Swaminathan was speaking at the CEO forum of the Federation of Telangana Chambers of Commerce and Industry in Hyderabad. He was for MSMEs registering on the Udyam Portal and filing GST returns. That will enhance their credibility and may qualify them for priority sector lending and government schemes, by reinforcing their trustworthiness in the eyes of financial institutions. Record keeping is another blind spot. 'Having financial statements prepared by certified professionals and audited by qualified auditors shall further bolster their credibility,' he said. This becomes critical as lenders also have to answer central bank inspectors if it is found they have been 'accommodative of MSMEs' with less than adequate financial records — well intentioned though it may have been to help tide over a tight situation. Bhavesh Jain, MD and CEO of TransUnion CIBIL, feels it is imperative that MSMEs receive assistance in accessing formal credit and guidance in debt management. Additionally, fluctuations in the business cycle affect these enterprises disproportionately, as they often lack the financial reserves or support necessary to navigate adverse conditions. 'Therefore, it is crucial to extend support to this sector and equip it with tools for effective financial management.' That said, MSMEs must also step up: it's a touchy area but the trade knows these issues cannot be ducked. 'Long way to go' 'My recent interactions with a cross section of MSMEs have brought out three clear areas where they have a long way to go: corporate governance, including data integrity; poor understanding of cross-border trade; and digital transformation,' notes Ravindra Kumar, advisory board member of SME Chamber of India. These seriously hamper MSMEs' creditworthiness, be it while raising loans or tapping capital. There is reluctance in hiring a professional chief financial officer (CFO) even in cases of larger mid-market companies. They would rather still depend on either virtual part-time CFOs or chartered accountancy firms. The larger SMEs have to get on board high-quality independent directors (IDs). The fight to onboard IDs is increasingly becoming tough across India Inc. 'A large section of MSMEs is now exposed to cross-border exposures either through imports or exports, but there is a fair lack of understanding as to how to finance international trade, manage cross-nation tariff and payment and currency risks,' says Kumar. The problem accentuates due to their lending partners being mostly local banks unable to provide the necessary expertise and hand holding. These companies must engage advisors who have international banking and trade financing experience. This fault-line is set to deepen and broaden with the global tariffs issue. Then you have the transition to digital. 'There's a need to push for adoption of a digital marketplace to serve the MSME segment — both from the supply and demand sides. This will help MSMEs to optimise their cost of production and at the same time bring about better demand discoverability to expand access to newer markets,' notes Rohan Lakhaiyar, partner at Grant Thornton Bharat. While the government is playing a role through MSME Mart, there's a compelling business case for digital startups to enter this niche and facilitate growth of MSME profitably. The RXIL-IIM Bangalore study touches upon this aspect: TReDS should partner with industry bodies and local associations to conduct workshops and webinars to educate MSMEs on the importance of working capital management and the benefits of the platform. It should advocate for government initiatives aimed at improving digital capabilities among MSME entrepreneurs.
Time of India
15-05-2025
- Business
- Time of India
Rs 25 lakh crore MSME credit gap: TReDS has sparked hope for small businesses, but what's holding it back?
The Trade Receivables Discounting System (TReDS) platform has made notable progress in facilitating credit access to micro, small, and medium enterprises (MSMEs) in the country. However, industry experts and stakeholders believe that significant expansion is still required to further increase its reach and effectiveness. According to them, the TReDS platform must broaden its coverage, particularly after the recent reduction in the turnover threshold for mandatory buyer onboarding from Rs 500 crore to Rs 250 crore, which will include more buyers. Vijay Mani, Partner and Banking and Capital Markets Leader, Deloitte India, acknowledges the important role of the TReDS platform in facilitating credit access to MSMEs. However, he points out that India still needs to address a substantial credit demand-supply gap. India's MSME sector, comprising over 64 million enterprises, faces a substantial credit gap of Rs 20-25 lakh crore, with only about 20% having access to formal financing, according to experts. 'The TReDS platform meets less than 5% of the credit demandfrom MSMEs. While the secondary market for discounted invoices is a useful avenue for improved liquidity, the challenge in the way of credit penetration lies elsewhere, i.e., we still don't have enough coverage of corporate buyers or buying. For a meaningful increase in coverage, it may be necessary to offer incentives to the buyers and allay their concerns about data privacy,' explains Mani. Similarly,Anil Bharadwaj, Secretary General, Federation of Indian Micro and Small & Medium Enterprises (FISME), highlights some issues affecting the TReDS platform, suggesting that it requires improvement. 'By design, TReDS is a buyer-dependent platform. Buyers have not warmed up to the platforms because it illuminates their payment practices. The boarding process is also found to be onerous by small MSMEs, adds Bharadwaj. Live Events Bharadwaj also points out that while the TReDS platform enjoys popularity among corporates, its adoption by central public sector enterprises (CPSEs) is still limited. 'Analysis indicates that only 10% of the total transaction volume on the TReDS platform is attributable to CPSEs,' says Bharadwaj. Introduced in 2017, the TReDS ecosystem aims to address the huge credit gap in India's MSME sector by providing a digital platform designed to enable timely financing and alleviate issues related to delayed payments. M1xchange, RXIL, Invoicemart, C2treds, and KredX are the existing TReDS operators in India. What stakeholders say TReDS has seen significant growth since March 2018, with both the number of invoices and the amount financed consistently increasing, say stakeholders. In FY24, the amount financed through TReDS nearly doubled compared to the previous year, surpassing Rs 1.46 lakh crore. Over half a million invoices have been financed, with small enterprises accounting for the largest share at 39.05%. Medium and micro enterprises follow closely, contributing 33.21% and 27.74%, respectively, according to the RBI data. iStock In FY24, the amount financed through TReDS nearly doubled compared to the previous year, surpassing Rs 1.46 lakh crore. The TReDS platform has facilitated over Rs 5.33 lakh crore in financing since its inception. In FY25, the platform saw significant growth, facilitating over Rs 2.35 lakh crore in financing, a substantial increase from Rs 1.38 lakh crore in the previous year, says Sundeep Mohindru, Promoter and Director of M1xchange, who is upbeat about the scope of TReDS going forward. 'TReDS, through its growing adoption and policy support, is well-positioned to expand its share in bridging this gap in the coming years. Over Rs 1.50 lakh MSMEs are on the TReDS platform from over 2,200 cities,' adds Mohindru. Mohindru also shares how M1xchange has experienced growth in its customer base and transaction volume, solidifying its position in the TReDS ecosystem. The platform's significant increase in invoice discounting volumes highlights the growing adoption of TReDS and the rising demand from MSMEs for efficient working capital solutions, he says. Notably, M1xchange recorded a total throughput of Rs 78,000 crore in FY25, nearly doubling its volume from Rs 43,000 crore in FY24, and a rise from Rs 23,100 crore in FY23. 'This consistent year-on-year growth highlights the platform's ability to cater to the evolving financing needs of MSMEs and corporates alike. Notably, the second half of FY25 alone witnessed a 150% increase in throughput, surging from Rs 32,000 crore in H1 to Rs 46,000 crore in H2. March 2025 was a milestone moment for M1xchange, achieving Rs 10,000 crore in invoice discounting within a single month—the highest ever for M1xchange,' he says. However, Mohindru admits that despite progress, much work remains to raise awareness about TReDS benefits, such as faster and collateral-free working capital, among MSMEs in semi-urban and rural areas. Similarly, Basant Kaur, Country Head & COO of C2FO India, says that despite significant growth of TReDS over the years, it still addresses a relatively small portion of the massive credit gap in the MSME sector, and the opportunity is enormous. With enhanced policy support and broader ecosystem participation, TReDS can transition from a niche solution to a mainstream financing channel, effectively unlocking liquidity for India's MSMEs, adds Kaur. Both experts and stakeholders say that TReDS faces some challenges, including dependency on buyer approval, which restricts supplier-initiated discounting. Additionally, smaller MSMEs often lack awareness about TReDS or face onboarding difficulties due to limited digital literacy and documentation issues, they add. TReDS transactions lack credit insurance, making financiers cautious when dealing with lower-rated or long-tail suppliers. Furthermore, buyer-side inertia, especially among large corporations and PSUs, results in underutilisation despite mandatory registration requirements, say experts and stakeholders. 'Banks are adopting the TReDS model for financing the business of one small MSME to another small MSME. From a financier's perspective, higher perceived credit risks associated with discounting MSME invoices, particularly when buyers are unrated or operate in informal sectors, act as a deterrent,' says Mohindru. Mohindru also shares how M1xchange has implemented alternative credit assessment models, leveraging digital transaction data from MSME sellers on the TReDS platform, to help banks better underwrite risk associated with invoices. 'This not only enhances credit visibility but also improves investor confidence by creating a more transparent and data-driven financing environment,' adds Mohindru. Innovation and policy support needed As the TReDS ecosystem experiences robust growth, the next phase should prioritise innovations and supportive policies to enhance financial inclusion and bring more MSMEs into formal financing channels, say experts and stakeholders. Integrating the GSTN portal with TReDS , where invoices uploaded to GSTN are automatically routed to TReDS, could significantly streamline the payment process and ensure timeliness, they add. 'The government should actively encourage larger corporates to adopt TReDS, as their participation is crucial for driving growth and expanding the platform's reach. A few states, such as Goa, have mandated all their PSUs and departments to onboard TReDS. The RBI has already made a host of suggestions to expand the scope of services that could be delivered through TReDS. Last but not least, there is a need to incentivise companies with a turnover above Rs 250 crore to make transactions through TReDS,' adds Bharadwaj. Kaur suggests enabling credit insurance and allowing secondary market trading of discounted invoices on TReDS, as previously proposed by the RBI. 'Mandate transaction thresholds (not just onboarding) for buyers, especially those with turnovers above Rs 250 crore. Additionally, TReDS participation should be linked to ESG scoring and credit ratings for buyers to create non-fiscal incentives for early payments. With these measures, TReDS can help drive inclusive, scalable, and transparent financing for India's MSMEs,' says Kaur. Mohindru advocates for activating credit guarantee funds for factoring, which could further support the growth of TReDS and enhance financing options for MSMEs. 'This fund has been sanctioned earlier and is yet to go live on TReDS. This fund works like the CGTSME scheme and will have a lock to service SMEs who supply goods and services to unrated/small buyers. Also, allowing TReDS second window i.e., allowing SMEs to discount invoices without buyer involvement, will help to cater to SMEs whose buyers do not live on the platform,' adds Mohindru.
