PSU Banks Participation on TReDS – M1xchange

The participation of PSU banks on M1Xchange (TReDS platform) has been forthcoming. In their role towards growing MSME finance, PSU banks have registered themselves on M1Xchange and started bidding to finance receivables of MSMEs.

PK Gupta, MD (R&DB) SBI, along with V. Ramling, CGM (SME), Sanjay Srivastava, GM (SME) and S Rana, DGM (SMEBU) recently completed the first digital transaction for MSME financing by State Bank of India on M1Xchange. The entire process – from hosting the invoice by the vendor (MSME), and the corporate buyer accepting it, to bidding and financing by the bank – was completed in a matter of minutes. SBI has successfully carved out a process for setting a limit on online corporate clients and discounting their MSME vendor invoices to participate actively in future.

Under the leadership of PS Jayakumar, MD & CEO, Bank of Baroda has been forthcoming in participation as well. Jayakumar, who has worked with many TReDS entities including M1Xchange, has duly stressed upon the bank’s commitment towards this initiative. As a result, Bank of Baroda has scaled up its business multifold in the last 2 months on M1Xchange. They have fine-tuned their process to take larger limits on clients, and fund more MSMEs in the coming future.

Jacob Raphael, COO, M1Xchange, has expressed that the active participation of PSU Banks will be a great enabler for liquidity on the exchange. It will help cover a larger spectrum of deserving corporates, as well as help their MSME vendors come under the TReDS umbrella. Since the MSME throughput on the exchange is growing at a tremendous rate, MSMEs will soon have a meaningful alternative to collateral based funding.

While PSU factoring companies such as SBI Global Factors and Canbank Factors have already been active on M1Xchange, more and more PSU banks like Punjab and Sind are getting onboard lately.

Banks appreciate the legal framework offered by M1Xchange, as they get a digitally signed ‘Deed of Assignment’ for every transaction. This gives the bank a legal title to the invoice receivable. The platform also provides great ease of use, be it for tracking the limit for each corporate or getting instant information through dashboard and reports. Besides, for every transaction made by corporates, MSMEs and banks, the concept of ‘maker and checker’ makes it a zero-error scenario.

Speaking about his experience of working with PSU banks, Ramesh Bisht, CFO, M1Xchange said that the biggest benefit of having PSU banks on a TReDS platform is that “it helps in offering liquidity to MSMEs at a larger scale. PSU banks have been funding MSMEs across the country and their participation in M1Xchange is really a welcome step to boost this further.” He added that it is heartening to witness the “zeal of leading PSU banks for adoption” of this digital technology and carving out their processes in sync with TReDS guidelines.

Both the Department of Financial services and Reserve Bank of India have been providing M1Xchange a lot of support, by simplifying the connected processes of the exchange and directing PSU banks and PSU corporates to carry out transactions on it. As of today, 15 financiers (including PSU banks mentioned above) are already onboard, while many other banks are in active discussion for on-boarding.

M1Xchange has been recognised as the Digital Solution of the Year 2017 at the IT Express Awards by Shri Amitabh Kant, CEO, Niti Ayog.