Small-Small Factoring under RBI regulatory sandbox offered by M1xchange with YES & RBL Bank

New Delhi, Aug 4 (KNN) TReDS platform M1xchange announced on Wednesday that it has started testing of ‘Small-Small Factoring’ product in partnership with YES BANK and RBL Bank under RBI’s third cohort of regulatory sandbox.

The product aims to enable early liquidity to Micro, Small & Medium Enterprises (MSMEs) buyers and sellers and offers a world class customer experience to MSMEs supported by a convenient and end-to-end digital process, said the press release.

After successful testing under sandbox, a full scale roll out of this product is expected to offer a highly effective and efficient solution for over USD 750 billion credit gap for MSMEs in India.

This product is one of the eight propositions that have been approved after a detailed evaluation of 22 applications by the RBI.

The testing under sandbox is expected to be complete by September 2022.

One of the key features of this product is the digital credit assessment engine that enables a 360 degree view of the credit profile of the MSME buyer using a cash flow based credit model.

Speaking about the development, Sundeep Mohindru, CEO, M1xchange said, “With this unique proposition developed by M1xchange TReDS, MSME enterprises will be able to utilise TReDS for receivables discounting from their MSME buyers. MSME buyers in turn will be able to procure at better prices and manage their inventory adequately.”

Speaking on the occasion, Ajay Rajan, Country Head – Transaction Banking, YES BANK said, “We at YES BANK are extremely glad to further our existing strategic partnership with TReDS platforms and participate with M1xchange in the RBI’s regulatory sandbox environment.”

“We are excited to partner with M1xchange on this innovative platform benefiting the small enterprises. The liquidity needs of the Indian MSME sector have increased, implementation of this sandbox will help achieve greater efficiency and enable the MSMEs to gain access to lower interest rates and collateral free credits”, said Rajiv Janjanam, Head – Retail Products & Digital, RBL Bank.

This model analyses authentic, non-repudiable data from multiple digital sources to generate rich insights around MSMEs credit profile and hence alleviates traditional concerns around authenticity of MSMEs business financials, a key data source in traditional balance sheet based credit assessment model.  (KNN Bureau)