India Exim Bank Enters Factoring Segment Of Trade Financing For MSMEs

New Delhi, Aug 9 (KNN) The India Exim Bank has expanded its operations in the factoring segment of trade financing, reported FE.

This move comes in the view of the MSME sector’s huge potential for exports and the requirement for easily accessible trade finances.

India Exim Finserve IFSC Private Limited, the newly inaugurated subsidiary of India Exim Bank, will exclusively focus on factoring finance growth and development among MSMEs, reported FE.

Speaking at the inauguration of its GIFT unit, Harsha Bangari, Managing Director, India Exim Bank, said, “In 2022-23 the exports from India stood at USD 774 billion, double the exports in 2013-14. The growth of Indian exports, despite the slowdown in advanced economies, continuing geopolitical conflicts and tightening monetary policies across the economies, shows the resilience and sustainability of the Indian economy. Additionally there is a great untapped export potential among the MSMEs in India.”

“Access to finances is one of the major reasons for the MSMEs for not achieving desired growth. According to Udyam data, only 1.36% of 17 million registered MSMEs are exporting their products. This new service of international factoring will help the MSMEs to raise short term workable capital so that they can expand their business without facing any financial constraint,” added Bangari.

K Rajaraman, chairman, IFSC GIFT said, “The foundation for certain and steady growth of financial services at the GIFT IFSC has been laid well. The India Exim Bank will be the first finance company at GIFT which will be doing work in trade financing. As India is working towards the goal to achieve USD 3 trillion worth of exports by 2030, there will be a multifold growth in the scope for finances.” 

The IFSC chairman also called upon other banks and financial institutions at GIFT to come forward and join the trade finance segment to enhance the whole banking ecosystem at the GIFT IFSC.

Vivek Joshi, secretary, department of financial services, Union ministry of finance, said, “The macroeconomic fundamentals for the Indian economy are strengthening and they are improving the growth prospects .The fact that India’s exports in 2022-23 stood at USD 776 billion (USD 450 billion merchandise exports and USD 326 billion services exports) indicates that international trade can be a viable growth engine. MSMEs contribute a substantial portion of exports from India (around 45%) but there is a lot of untapped export potential and factoring finance has the potential to unlock it.”

He further said, “In other economies, factoring is one of the major sources of trade financing while in India, it constitutes only 2.6% of total MSME credit follow up. This means that this segment of trade financing has a huge potential that is waiting to be accessed. With this mechanism, the exporters can convert their trade receivables into leap funds and can generate short term finances to expand their businesses.”

Pushpesh Tyagi, who has been appointed the managing director & CEO of the India Exim Finserve IFSC Private Limited, added “The main focus is to stabilise the operations within a year. We are planning to start doing the business by the end of September. The unit will start operating with a manpower of 8-10 employees while the strength of manpower will grow according to the growth of business.”  (KNN Bureau)