Frequently Asked Questions
Below are answers to some of the frequently asked questions
Ans: According to the RBI TReDS guidelines, both Buyer and the seller must be registered on M1Exchange. As the counterparty is needed to accept the invoice. In case the buyer is not registered on M1Exchange the seller may request buyer to register or can contact M1Exchange personnel to get in touch with Buyer and get it registered. The same can be followed if Seller is not registered.
|Sellers||MSME entities as per the definition of the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”)|
|Buyers||Corporates including companies and other buyers including Government Departments and Public Sector Undertakings and such other entities as may be permitted by the Reserve Bank of India (RBI)|
|Financiers||Banks, NBFC Factors, Financial Institutions and such other institutions as may be permitted by RBI from time to time|
|Manufacturing(Investment in Plant and Machinery)||Service Sector(Investment in Equipment)|
|Micro||Does not exceed Rs. 25 Lakh||Does not exceed Rs. 25 Lakh|
|Small||More than Rs. 25 Lakh but does not exceed Rs. 5 Crore||More than Rs. 10 Lakh but does not exceed Rs. 2 Crore|
|Medium||More than Rs. 5 Crore but does not exceed Rs. 10 Crore||More than Rs. 2 Crore but does not exceed Rs. 5 Crore|
Ans: Factoring Unit Reference ID is a unique reference ID against the invoice or set of invoices uploaded on the platform by the seller or the buyer reflecting the underline trade receivable of MSME seller.
Factoring Unit Reference ID becomes factoring unit on acceptance of the factoring unit reference ID (comprising of invoice details and scanned invoice) by the counterparty, the instrument becomes a Factoring Unit. Only accepted instruments enter into a bidding.
|Factoring||When seller initiates the process of financing of trade receivables and generally bears the interest/financing cost.|
|Reverse Factoring||The Buyer initiates the process of financing of trade receivables of Sellers. The interest/financing cost may be borne by Buyer or Seller.|
Ans: Enroll on M1Exchange by registering on M1 website. Submit details required forms. M1 executive will get in touch with you to help you register to the m1 process.
After providing the requisite documents M1 will take the request forward and intimate the participant once it is successfully registered.
Ans: The document checklist would be as follows basis the kind of participants:
Ans: Generally registration process takes on an average 15 days, post receipt of all the required documents.
Ans: Tax invoices related to the goods or services provided by MSME supplier to the buyer will be eligible for financing on M1Exchange.
Ans: Yes, it is available for all the participants.
Ans: Whosoever (Buyer or Seller) is having right to accept the bid, can see the bids offered by the Financiers.
Ans: Buyer and Seller can upload and approve the invoices at any moment. They can also accept the bid anytime they want.
Financiers can quote/withdraw/rebid against any factoring unit between the 10AM to 4PM (Mon-Fri).
Ans: The factoring of the factoring unit shall depend on time consumed in receipt of bid from the Financiers during auction period and it’s acceptance by the seller/buyer. On bid acceptance, the payment shall be settled on T+1 or T+2 basis based on the cut-off time of acceptance of bid.
Ans: If no bids are received from Financiers or the invoice remains unfinanced then the commitment between the Buyer and Seller continues. In such case, the Buyer needs to make the payment to the Seller. The Buyer has the option to make the payment to the Seller through the system.
Ans: No. The financing of factoring units is not guaranteed on the TReDS platform. It is dependent on offering of bids by the Financiers, acceptance of bids by the cost bearer and settlement of obligation by the participants.
Ans: Yes. A Factoring Unit may be withdrawn from TReDS portal till the time a bid is not accepted by the cost bearer. It cannot be withdrawn after the bid is accepted by the cost bearer.
Ans: Amount which is not financed by the financier, and kept as a margin is known as margin money. This money is credited to supplier on due date.
Ans: Yes, but you cannot raise/present the same invoice to another Financier which is already discounting on TReDS platform.
Ans: The overall Grievance Redressal mechanism of TReDS would be multilevel and would ensure timely and correct resolution of each complaint/query/grievance.
|4th Level||Committee of Buyer, Supplier and Financier along with M1 Ombudsman and M1 Business Head|
|3rd Level||M1 Compliance Manager / Head*|
|2nd Level||M1 Anchor BD Manager|
|1st Level||Customer support desk|
|Self Help||MIS for Buyer / supplier and Financier|
*compliance manager/nodal officer can be reached at email@example.com and/or 0124 4349330 ext-378
Ans: Once the bid is accepted by the seller or buyer whoever is the cost bearer, the designated bank account of the Financier will be auto-debited based on the mandated provided by them on T+1 (Bid acceptance date = 1 working day) and M1Exchange to make the payment to the designated account of the Seller on T+1.
Similarly, on the final due date, the designated bank account of the Buyer will be auto-debited and the payment will be made to the Financier in its designated bank account on the same day or next day.
Ans: The Buyer shall repay the obligation to the financier on the due date of the factored invoice which shall be goods acceptance date plus credit period. If the due date falls on a holiday, the obligations need to be settled on the preceding working day.
Ans: If the payment from Financier to Seller fails, the factoring unit will be marked as Failed on the platform of M1Exchange. In such context, the Buyer needs to pay to the Seller directly on the due date outside the system.
There is also a provision for the Seller or the Buyer to re-initiate bidding in such cases.
Ans: Non-payment by the Buyer on the due date to the Financier is equivalent to a default by the Buyer. The Buyer is required to settle directly with the Financier if the transaction is marked failed on the TReDS portal.
Ans: Digital Signature Certificates (DSC) are the digital equivalent (that is electronic format) of physical or paper certificates. Examples of physical certificates are drivers' licenses, passports or membership cards. Certificates serve as a proof of identity of an individual for a certain purpose; for example, a driver's license identifies someone who can legally drive in a particular country. Likewise, a digital certificate can be presented electronically to prove your identity, to access information or services on the Internet or to sign certain documents digitally.
Ans: Like physical documents are signed manually, electronic documents, for example e-forms are required to be signed digitally using a Digital Signature Certificate. Transactions that are done using Internet if signed using a Digital Signature certificate becomes legally valid.
Ans: A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian IT-Act 2000.
Ans: The different types of Digital Signature Certificates are: Class 2: Here, the identity of a person is verified against a trusted, pre-verified database. Class 3: This is the highest level where the person needs to present himself or herself in front/ of a Registration Authority (RA) and prove his/ her identity.
Ans: DSC of Class 2 or Class 3
Ans: Digital Certificates can be obtained from any licensed Certifying authority or its distributors.
Ans: The cost of obtaining a digital signature certificate can be obtained by calling M1 Helpdesk on the helpdesk number or by directly contacting the authorized distributor as listed above.
Ans: The pre-requisites to use digital signatures on M1Exchange are as follows:
Ans: For Class 2 Digital Signature Certificate following documents are required to be submitted to our authorized distributor
a) Aadhar Card
c) Driving License
d) PAN Card
e) Post Office ID Card
f) Bank Account Passbook/Statement containing the photograph and signed by an individual with attestation by the concerned bank official
g) Photo ID Card issued by the Ministry of Home Affairs of Centre/State Governments
h) Any Government issued Photo ID Card bearing the signatures of the individual Proof of Address (Any One)
a) Aadhar Card
b) Telephone Bill
c) Electricity Bill
d) Water Bill
e) Gas Connection
f) Bank statements signed by the bank
g) Service Tax/VAT Tax/Sales Tax registration certificate
h) Driving License (DL) / Registration Certificate (RC)
i) Voter ID Card
k) Property Tax/Corporation/Municipal Corporation Receipt