Singapore-headquartered DBS Bank in India on Monday announced its pre-shipment financing solution for MSMEs on the invoice discounting system TReDS in partnership with Receivables Exchange of India Limited (RXIL), one of the TReDS platforms. DBS Bank India already offers post-shipment finance for MSMEs on the RBI-backed TReDS platform.
DBS Bank India will leverage alternative trade lending data from RXIL to underwrite financing to MSME suppliers and support their entire trade cycle, from sourcing raw materials to delivering end products to the customer.
“This offering will be particularly relevant for MSMEs and SMEs across India, enabling them to enhance cash flows to fulfill orders even before goods are delivered to buyers,” the bank said in a statement.
Speaking on the launch, Divyesh Dalal, Managing Director & Head – Global Transaction Services, SME & Institutional Liability Business, DBS Bank India, said, “The structure enables us to significantly reduce the time required for credit decisioning and linked documentation, which will greatly benefit time-strapped business owners. DBS Bank India will be the first bank to partner with RXIL to offer end-to-end supplier financing by harnessing platform data to perform credit assessment and sanction limits.”
Citing a report by the Ministry of External Affairs, DBS Bank India said MSMEs contributed 45.56 per cent of total exports from April to September 2023. Despite their sizeable share in trade flows, MSMEs often face challenges establishing favourable payment and credit terms with buyers, managing outflows, and obtaining the documentation required by formal lenders, the bank added.
“Our shared vision entails leveraging a data-driven approach to assist MSMEs in streamlining operations, enhancing liquidity, and facilitating their trade journey as they expand their business. Additionally, this collaboration promises to alleviate the working capital challenges faced by MSMEs, offering tailored solutions to enhance their financial stability and propel their growth trajectory,” said Ketan Gaikwad, Managing Director & CEO, RXIL.
RXIL is a joint venture of SIDBI, NSE along with State Bank of India, ICICI Bank, and Yes Bank.