Seller
Buyer
Financier
M1xchange, one of the three Reserve Bank of India (RBI) recognised online invoice discounting and financing platforms, is eyeing nearly Rs 45,000 crore in throughput value in the current financial year, higher than Rs 23,100 crore in FY23, CEO Sundeep Mohindru told FE. Throughput value is the overall value of bills/invoices discounted or financed on TReDS platform.
Mohindru says presently there are nearly 60 banks and non-banking finance companies (NBFC) on the Trade Receivables Discounting System (TReDS) platform to finance and discount invoices of nearly 25,000 micro, small and medium enterprises (MSMEs). It also has 1,300 registered corporate customers of MSMEs on the platform. The number of MSMEs and corporates will double in the current fiscal, Mohindru said.
While large banks like State Bank of India, HDFC Bank, Bank of Baroda and NBFCs like Tata Capital and Cholamandalam Finance are participants on the exchange, the top three lenders who are most active on the platform and enable financing, discounting of nearly Rs 4,000 crore to Rs 5,000 crore of invoices on the platform each fiscal are SBI, Canara Bank and Bank of India.
Mohindru said currently a MSME can get charged as high as 18% to 24% rate of interest per annum in case it does not provide collateral to lenders and NBFCs for loans. However, buyers and sellers at TReDS platforms can get financing at the rate of 7%-11% per annum, as the risk is benchmarked to a larger corporate’s balance sheet.
“For example, if a MSME is supplying goods and services to Mother Dairy, and if Mother Dairy is getting financing done at 7%-8%, then I (MSME) am a supplier of Mother Dairy, I will also get my financing done at 7%-8%. That is how the product is structured and therefore the cost of financing is very low,” Mohindru said.
In order to expand the business scope and security aspect in TReDS platforms, the RBI in June allowed insurance companies to onboard on such platforms. Entry of insurance companies will comfort lenders by way of guarantee of repayment in case of delinquencies, Mohindru says, adding that a few insurance companies may join the TReDS platforms as soon as Q3FY24.
Lastly, M1Xchange’s total revenue will rise to Rs 50 crore-Rs 55 crore in FY24 from Rs 30 crore in FY23, he said, while bottomline is expected to grow three-four folds during current fiscal from Rs 1.5 crore in FY23.