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Mynd has set up TREDS platform – M1xchange for MSME funding at an interest cost which is in parity with large corporate. In M1, MSME suppliers are provided finance against their receivables to large corporate by way of Factoring. Banks discount the invoice and make instant payment to MSME and collect the receivables from the large corporate as per the credit period.
Mynd Solutions is a leading global service provider in business process and technology management, offering broad spectrum of shared services in Finance and Accounting (FAO) and Human Resource (HRO), IT process and Consulting. It boasts of over 270 clients across 400 locations in India.
Besides offering a platform as SaaS (Software as a Service), Mynd has an all India presence through 4 hub and 22 spoke locations with global presence in Asia, Middle-East and Africa. It has 1200+ employees processing 2.5 mn+ transactions every month.
Sundeep Mohindru, Founder & CEO, M1xchange and Mynd Solutions in a interaction with SME WORLD.
Access to finance by small entrepreneurs is a major hurdle coming in the way of entrepreneurial growth. What is the reason, in your view, for banks to stay away from small credits to MSMEs?
Banks look at multiple factors for imparting credit to small entrepreneurs – namely repaying capacity, cash flow from previous transactions, working capital requirements, utilization of funds disbursed by banks and the collateral offered for security.It is difficult for new enterprises to meet all criteria as per requirements and therefore credit get extended to them stage by stage. The credit extended is always one to two steps behind the needs of the enterprise.
Another stumbling block is the cost of credit. How come that corporate (large industries) and small entrepreneurs have different rate of interest. There should be a level playing field. Comment!
The interest rates offered by banks depend on the risk that they see on the borrower. Each bank has a different risk appetite for the type and size of business and life cycle of business. Basis this risk the interest cost is charged from clients. No two fingers in hand are of equal size.
What is the USP of Mynd Solutions and how it is improving the financial ecosystem?
Mynd has set up TREDS platform – M1xchange for MSME funding at an interest cost which is in parity with large corporate. In M1, MSME suppliers are provided finance against their receivables to large corporate by way of Factoring. Banks discount the invoice and make instant payment to MSME and collect the receivables from the large corporate as per the credit period. This model is further unique that banks bids for discounting of invoices by offering the best rate of interest. MSME supplier therefore gets best of both world – instant finance and best rate of interest without collateral. The risk of collection of receivables of MSME supplier is passed on to banks.
Give some success stories, if any.
In this model, many large corporate are supporting their supplier ecosystem for instant payment and support them for enhancing their Working capital cycle. One such example is Syska LED where their suppliers are getting paid instantly by the banks at competitive rates. The digital platform has enabled the large corporate and their suppliers and financiers to participate from their respective offices. The legal formalities of disbursement of funds are managed electronically within few minutes that brings savings on time and current cost of funds. Also, the collection of funds from corporate on due date is enabled by M1xchange.