M1xchange, a digital invoice discounting platform for Micro, Small and Medium Enterprises (MSMEs), is eyeing business volumes of ₹30,000 crore in 2022-23, riding on the dramatic scaling up of the TReDS platform movement in the country in the last two years. 

This will be more than double the volume of ₹13,000 crore that the Trade Receivables Discounting System (TReDS) platform expects to clock this fiscal, Chief Executive Officer (CEO), Mynd Solutions, Sundeep Mohindru, told BusinessLine here.

In fiscal 2020-21, M1xchange recorded business volumes of about ₹5,700 crore. Its decision to introduce a mobile app has accelerated the adoption among MSMEs, with transactions now being put through from over 900 cities across the country.

“We have further accelerated this upswing — in addition to the ecosystem development — by launching a mobile app. Every MSME on our portal now uses this app. This is one big change we have brought about in the last two years. About 40 per cent of our business volumes come through the mobile app,” he said

Mohindru said the upswing in business volumes has come as all three participants — MSMEs, large corporates and banks — have seen benefits from the TReDS. The confidence of banks has gone up and every bank now wants to participate in the TReDS platform because there is minimum default even in a corona environment, he noted. 

Set up by Mynd Solutions in April 2017, M1xchange is among the three Trade Receivable Discounting Systems (TReDS) platforms — online marketplaces — approved so far by the RBI to bring together buyers, sellers and financiers for discounting MSME invoices.

Private sector dominates

Currently, as much as 98 per cent of the business volumes of M1xchange are accounted for by the private sector. Although 120 central public sector enterprises have been onboarded, their participation is “very negligible”.

On break even, Mohindru said the company had achieved break even for January 2022. “ I do see M1xchange achieving break even for the full year in 2022-23,” he added.

NBFCs’ entry

For the next fiscal, Mohindru expects business volumes to scale up further now that the government and RBI have allowed NBFCs to do funding via the TReDS platform. Prior to the amendment in the Factoring Act in September 2021, only banks were allowed to come on TReDS.

“NBFCs will bring liquidity to corporates that are BBB-rated or B-rated corporates, who are not getting lines of credit from the banks. As a result, we are not able to do TReDS financing for their MSMEs. That business is completely unattended. We have 400 such corporates who we are not able to service today. There is a lot of upside to capture because these NBFCs will come on board and there will be a lot of liquidity,” Mohindru said.

About 180 NBFCs qualify to participate in TReDS platforms and these are expected to bring in liquidity in the coming days. None of the NBFCs have so far got the certificate for commencement from RBI. The first one is expected in March this year.

TRADE CREDIT INSURANCE 

Mohindru said the IRDAI-approved Trade Credit Insurance facility is expected to go live on the M1xchange platform in April this year. This will be the first time in the country that trade credit insurance will be allowed to be done invoice by invoice digitally on the TReDS platform. Right now Trade Credit Insurance is running on a whole turnover basis. Now on TReDS, a small enterprise can get his invoice financed based on one invoice say ₹5 lakhs or ₹10 lakhs or ₹ 0 lakhs. “ We have already done our integration with this insurance company (Tata AIG General Insurance). We expect to do the first transaction in April,” he said.

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