Credit and finance for MSMEs: Reserve Bank of India (RBI)-licensed trade financing platform M1xchange is testing the International Trade Financing Services (ITFS) platform — international version of the trade financing service TReDs, the company announced on Friday. M1xchange said ITFS will allow MSMEs to avail early payment at interest rates as low as 4-9 per cent against their invoices after exporting their goods and services to the US, Europe, Middle East and Singapore markets from various financiers on boarded with ITFS.
With the growth of the digital and globalized marketplace, M1NXT will support Indian exporters with liquidity for international trade transactions through a worldwide network of institutional financiers and banks that purchase receivables through a real-time marketplace, M1xchange said announcing the testing.
Also read: TReDS: MSME invoices uploaded, financed in FY22 more than doubled from previous year, says RBI report
M1xchange was among the four trade-financing platforms to get the license in 2021 from the International Financial Services Centres Authority (IFSCA), which regulates Gujarat’s Gift City-based International Financial Service Centre, to operate ITFS for the international trade financing market. Other platforms were RXIL, KredX and Vayana.
“The organization is trying to onboard and engage with as many national and international banks as possible for bringing the liquidity for the exporters of India,” Jacob Raphael CEO M1NXT.
Also read: How international factoring licenses to fintechs are likely to ease MSME liquidity issues, boost exports
The invoice discounting, factoring, or trade financing is an overwhelmingly big market globally – over $3 trillion and is likely to be worth around $6-9 trillion in the coming four-seven years, according to multiple studies. However, the Indian market’s size is only of around $6 billion or 0.2 per cent of the country’s gross domestic product (GDP), according to a report by the Standing Committee on Finance laid in Rajya Sabha in February 2021 on the factoring bill.
In July 2021, the Parliament had passed the Factoring Regulation (Amendment) Bill, 2021 to help MSMEs with better avenues for credit access particularly through TReDS. The amendments made to the bill were to widen the participation of entities such as non-banking financial companies (NBFCs) in the factoring market.
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