RXIL News & Events

Date Title
03-Apr-2022 TReDS platform RXIL doubles biz volume to over ₹13,400 cr in FY22

Receivables Exchange of India Ltd (RXIL), a leading invoice discounting platform for MSMEs, has achieved a monthly throughput of ₹2,000 crore for the first time in the month of March 2022.

Read more: https://www.thehindubusinessline.com/economy/treds-platform-rxil-doubles-biz-volume-to-over-13400-cr-in-fy21-22/article65286717.ece

28-Mar-2022 Micro, small and medium enterprises staring at enduring financial distress

Last week, the Parliamentary Standing Committee on Industry made a case for extending the repayment period under the Emergency Credit Line Guarantee Scheme (ECLGS) up to seven to eight years, from the current three to four years. The scheme was rolled out in May 2020 as part of a relief package for micro, small, medium and small enterprises (MSMEs) at a time when they were reeling from stress caused by the pandemic. The committee’s announcement was not unexpected, for Finance Minister Nirmala Sitharaman had said so in her Budget speech — but this lifeline was to be alive.

Read More: https://www.business-standard.com/article/finance/micro-small-and-medium-enterprises-staring-at-enduring-financial-distress-122032700847_1.html

21-Mar-2022 TReDS: Value of MSME invoices financed in FY22 doubles from previous year, triples from FY20

Credit and Finance for MSMEs: Invoice discounting mechanism for MSMEs — Trade Receivables Discounting System (TReDS) — regulated by the Reserve Bank of India (RBI) has registered a steep rise in the value of invoices financed in the current financial year vis-a-vis FY21, as per the RBI data. The value of transactions undertaken on TReDS platforms in FY22 doubled to Rs 34,362 crore from Rs 17,080 crore amid Covid in FY21, and more than tripled from Rs 11,165 crore during pre-Covid FY20. The data was shared by MSME Minister Narayan Rane in a written reply to a question in Rajya Sabha on Monday. The overall transaction value since the inception of TReDS in 2017 stood at Rs 69,277.93 crore.

Read More: https://www.financialexpress.com/industry/sme/msme-fin-treds-value-of-msme-invoices-financed-in-fy22-doubles-from-previous-year-triples-from-fy20/2466818/

09-Mar-2022 Artfine’s Arth Padarth Factoring joins RXIL’s TReDS platform

Artfine, a specialist supply-chain financing firm which recently secured the NBFC factoring license from RBI through its group company Arth Padarth Factoring and Finance Pvt Ltd, has partnered with Receivables Exchange of India Ltd (RXIL) to onboard on RXIL as a financier. The objective of the partnership is to finance invoice factoring for MSMEs and helping the MSMEs sell their receivables on RXIL's TReDS platform. Artfine also intends to integrate their invoice discounting platform 'ArtfineBilz' with RXIL to offer seamless customer experience, provide new products and increase its reach with the corporates as well as MSMEs.

Read More: https://www.bizzbuzz.news/amp/eco-buzz/artfines-arth-padarth-factoring-joins-rxils-treds-platform-1116454

01-Mar-2022 RBI Measures For MSMEs, Contact-Intensive Sectors Augur Well For Economy

A status quo in repo rate underlines RBI's priority in supporting GDP growth amid the lingering impact of the pandemic, while additional measures for MSMEs, contact-intensive sectors and digital transactions augurs well for the overall economic health, financial market participants said on Thursday.

Read more:
http://www.businessworld.in/article/RBI-Measures-For-MSMEs-Contact-intensive-Sectors-Augur-Well-For-Economy-/11-02-2022-420241/

23-Feb-2022 Artfine’s Arth Padarth Factors joins RXIL’s TReDS platform

Artfine, a specialist supply-chain financing firm which recently secured the NBFC factoring license from RBI through its group company Arth Padarth Factoring and Finance Pvt Ltd. has partnered with Receivables Exchange of India Ltd. (RXIL) to onboard on RXIL as a financier. The objective of the partnership is to finance invoice factoring for MSMEs and helping the MSMEs sell their receivables on RXIL’s TReDS platform. Artfine also intends to integrate their invoice discounting platform “ArtfineBilz” with RXIL to offer seamless customer experience, provide new products and increase its reach with the Corporates as well as MSMEs.

Read More: https://www.apnnews.com/artfines-arth-padarth-factors-joins-rxils-treds-platform/

23-Feb-2022 Artfine’s Arth Padarth Factors joins RXIL’s TReDS platform

Artfine, a specialist supply-chain financing firm which recently secured the NBFC factoring license from RBI through its group company Arth Padarth Factoring and Finance Pvt Ltd. has partnered with Receivables Exchange of India Ltd. (RXIL) to onboard on RXIL as a financier. The objective of the partnership is to finance invoice factoring for MSMEs and helping the MSMEs sell their receivables on RXIL’s TReDS platform.

Read More:

https://ibsintelligence.com/ibsi-news/artfines-arth-padarth-factors-joins-rxils-treds-platform/

22-Feb-2022 Artfine collaborates with RXIL to finance invoice factoring for MSMEs

Artfine, a specialist supply-chain financing firm which recently secured the NBFC factoring license from RBI through its group company Arth Padarth Factoring and Finance Pvt Ltd. has partnered with Receivables Exchange of India Ltd. (RXIL) to finance invoice factoring for MSMEs and helping the MSMEs sell their receivables on RXIL’s TReDS platform.

Read More: 

https://knnindia.co.in/news/newsdetails/msme/artfine-collaborates-with-rxil-to-finance-invoice-factoring-for-msmes

22-Feb-2022 India - Artfine collaborates with RXIL to finance invoice factoring for MSMEs

Artfine, a specialist supply-chain financing firm which recently secured the NBFC factoring license from RBI through its group company Arth Padarth Factoring and Finance Pvt Ltd. has partnered with Receivables Exchange of India Ltd. (RXIL) to finance invoice factoring for MSMEs and helping the MSMEs sell their receivables on RXIL's TReDS platform.

Read More: 

https://menafn.com/1103746218/India-Artfine-collaborates-with-RXIL-to-finance-invoice-factoring-for-MSMEs

22-Feb-2022 Indian SCF provider signs cooperation agreement with RXIL for digital invoice finance

Artfine, a specialist supply-chain financing firm has partnered with Receivables Exchange of India

Read More: https://bcrpub.com/news/indian-scf-provider-signs-cooperation-agreement-rxil-digital-invoice-finance

11-Feb-2022 RBI measures for MSMEs, contact-intensive sectors augur well for economy, say financial experts

A status quo in repo rate underlines RBI's priority in supporting GDP growth amid the lingering impact of the pandemic, while additional measures for MSMEs, contact-intensive sectors and digital transactions augurs well for the overall economic health, financial market participants said on Thursday. For the 10th time in a row, the six-member rate setting Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) kept the key repo rate unchanged at 4 per cent, mainly to support growth as  ..
 

10-Feb-2022 RBI measures for MSMEs, contact-intensive sectors augur well for economy

A status quo in repo rate underlines RBI's priority in supporting GDP growth amid the lingering impact of the pandemic, while additional measures for MSMEs, contact-intensive sectors and digital transactions augurs well for the overall economic health, financial market participants said on Thursday.

Read More: https://www.business-standard.com/article/finance/rbi-measures-for-msmes-contact-intensive-sectors-augur-well-for-economy-122021001696_1.html

10-Feb-2022 MSME invoice discounting: RBI increases NACH mandate limit from Rs 1 cr for TReDS settlements

Credit and Finance for MSMEs: The Reserve Bank of India (RBI) in its monetary policy review on Thursday enhanced the National Automated Clearing House (NACH) mandate limit from Rs 1 crore to Rs 3 crore for settlements related to the invoice discounting mechanism for MSMEs — Trade Receivables Discounting System (TReDS). In his statement, RBI Governor Shaktikanta Das said, “Keeping in view the requests received from stakeholders and to further enhance the ease of financing the growing liquidity requirements of MSMEs, it is proposed to increase the NACH mandate limit from Rs 1 crore at present to Rs 3 crore for TReDS related settlements.”

Read More: https://www.financialexpress.com/industry/sme/msme-fin-msme-invoice-discounting-rbi-increases-nach-mandate-limit-from-rs-1-cr-for-treds-settlements/2430304/

10-Feb-2022 NACH mandate limit for TReDS settlements to be hiked to ₹3 crore

In view of the growing liquidity requirements of Micro, Small and Medium Enterprises (MSMEs) and requests from industry, the National Automated Clearing House (NACH) mandate limit for Trade Receivables Discounting System (TReDS) settlements would be increased to ₹3 crore.

Read More:

https://www.thehindubusinessline.com/money-and-banking/nach-mandate-limit-for-treds-settlements-to-be-hiked-to-3-crore/article64999546.ece

10-Feb-2022 MSME invoice discounting: RBI increases NACH mandate limit from Rs 1 cr for TReDS settlements

The Reserve Bank of India (RBI) in its monetary policy review on Thursday enhanced the National Automated Clearing House (NACH) mandate limit from Rs 1 crore to Rs 3 crore for settlements related to the invoice discounting mechanism for MSMEs — Trade Receivables Discounting System (TReDS). In his statement, RBI Governor Shaktikanta Das said, “Keeping in view the requests received from stakeholders and to further enhance the ease of financing the growing liquidity requirements of MSMEs, it is proposed to increase the NACH mandate limit from Rs 1 crore at present to Rs 3 crore for TReDS related settlements.” 

Read More:

https://www.msn.com/en-in/money/markets/msme-invoice-discounting-rbi-increases-nach-mandate-limit-from-rs-1-cr-for-treds-settlements/ar-AATGrrY

28-Jan-2022 MSME Budget 2022 Expectations: Three key areas experts say FM Nirmala Sitharaman must address

Ease of Doing Business for MSMEs: Despite credit-related measures announced by the government since Covid struck in 2020, a large number of MSMEs haven’t been able to access them, particularly those who had never secured bank credit. Also, crores of small businesses, which aren’t registered as MSMEs, were left high and dry during the pandemic.

Read More:

https://www.financialexpress.com/industry/sme/msme-eodb-msme-budget-2022-expectations-three-key-areas-experts-say-fm-nirmala-sitharaman-must-address/2417204/

07-Dec-2021 Government of Goa joins TReDS as buyer helps 250 MSMEs & clears Rs. 575 cr funds; sets example for other states

New Delhi, 7 Dec (KNN) The government of Goa became the first state government to partner with Receivables Exchange of India Ltd (RXIL) to get onboarded as a ‘Buyer’ on TReDS platform which is automatically linked with Government’s e-Marketplace (GeM). This initiative was taken by the government of Goa in view of struggling condition of MSMEs and the low tax collection. Hence it took such an action, as ‘buyer participants’, state agencies have a one-stop portal to clear pending invoices, as published in Mint. This addresses two issues facing MSMEs. One, it enables the prompt encashment of receivables. Two, factors have no recourse to MSMEs if they don’t get paid on the due date. The credit risk is borne by factors, opined V. Anantha Nageswaran, visiting professor of Krea University & Ketan Gaikwad, MD & CEO of Receivables Exchange of India Ltd.

Read More: https://knnindia.co.in/news/newsdetails/sectors/government-of-goa-joins-treds-as-buyer-helps-250-msmes-sets-example-for-other-states

06-Dec-2021 The Goa government’s TReDS adoption is worthy of emulation

Economists and policymakers are unanimous in their desire to see improvement in the access that micro, small and medium enterprises (MSMEs) have to finance. The Union government had taken several measures to improve the working capital situation for small businesses. The MSME Development (MSMED) Act of 2006 provides for the naming and shaming of large buyers that don’t pay small businesses on time for goods procured or services received. MUDRA loans were designed to widen credit availability. The Emergency Credit Line Guarantee Scheme of the Centre stimulates the extension of new credit to small businesses. The Reserve Bank of India (RBI) had steered the launch of the Trade Receivables Exchange system, wherein small businesses can get invoices accepted by their buyers discounted and receive payments from financial institutions that will collect the receivables on their due dates. On its part, the government has made it mandatory for companies with a turnover of ₹500 crore or more to get registered on the TReDS platform. The Government’s e-Marketplace (GeM) is automatically linked to TReDS. That is, invoices raised for procurements made by the government through the GeM can be easily discounted on TReDS platforms and payments collected by small suppliers. However, many big government procurers lie outside TReDS coverage. It is in this milieu that an initiative taken by the Goa government assumes significance.

Read More: https://www.livemint.com/opinion/columns/the-goa-government-s-treds-adoption-is-worthy-of-emulation-11638808441420.html

22-Oct-2021 Trade credit insurance: Firms likely to be ready by early next year

Companies are gearing up for trade credit insurance covers, the guidelines for which will come into effect from November 1, and believe that this will improve liquidity for micro, small and medium enterprises. A number of insurance companies are understood to be already working on draft agreements and products and they are expected to be fully prepared by early 2022.

 

Read More: https://www.thehindubusinessline.com/money-and-banking/trade-credit-insurance-firms-likely-to-be-ready-by-early-next-year/article37108565.ece

21-Oct-2021 Trade credit insurance norms to kick in from Nov 1

Small businesses hope to benefit from improved liquidity Companies are gearing up for trade credit insurance covers, for which the guidelines come into effect from November 1. This is expected to improve liquidity for micro, small and medium enterprises (MSMEs). A number of insurance companies are said to be working on the draft agreements and products.

Read more: https://www.thehindubusinessline.com/money-and-banking/trade-credit-insurance-norms-to-kick-in-from-nov-1/article37104510.ece

 

20-Oct-2021 TReDs: The Pandemic Brought A Silver Lining For Trade Receivable Platforms

The Covid-19 pandemic, which accelerated digitisation across a number of sectors, also brought increased traction for trade receivable platforms, which attempt to solve the age-old problem of payment delays for small businesses.These platforms, which rolled out starting 2017, are all reporting a jump in volumes of receivables financed, with a noticeable jump in the months after the pandemic hit. As the business grows, it is also attracting new entrants with BSE Ltd. intending to enter the space.

Read more at: https://www.bloombergquint.com/business/treds-the-pandemic-brought-a-silver-lining-for-trade-receivable-platforms Copyright © BloombergQuint

05-Oct-2021 Four platforms get IFSCA license for factoring business at Gift City

The International Financial Services Centres Authority (IFSCA), the sole regulator of the Gift City-based International Financial Service Centre, has issued licences to four trade-financing platforms to tap the €2,724-billion international factoring business. The supply chain finance potential in global trade is $17 trillion. Indian-licensed trade-financing platforms, or TReDS (trade and receivables discounting system) platforms, use blockchain for checking bills submitted for discounting and they may be tested and used for Gift City ventures as well. However, this is not mandatory from the IFSCA point of view but entities coming up at the IFSC are contemplating the use of blockchain. These in-principle licences were issued by the IFSCA last Friday to start working through sandbox facilities before formal business.

Read more: https://www.business-standard.com/article/companies/four-platforms-get-ifsca-licence-for-factoring-business-at-gift-city-121100400016_1.html

27-Sep-2021 5 FinTech companies helping MSMEs scale their businesses

One sector hit the hardest by the pandemic has been the MSMEs. A number of entrepreneurs have reported the inability to survive more than 3 months owing to the disruptions faced in the last year. Small scale enterprises have faced a deep chasm in business operations, supply chain, credit access and other areas that have led to unprecedented losses and inability to stay afloat. This period has also forced enterprises to overhaul their way of working and move towards a digital and cloud-first infrastructure. In these times, five such companies have risen to help SMEs thrive and adopt seamless services: RXIL: In recent years, digital lending has been able to service the problem areas of the MSME ecosystem fairly efficiently. However, a completely recourse free mechanism called TReDS launched by the Govt. of India has enabled over 24,000 MSMEs unlock access to cashflow from their own working cycles. Receivables Exchange of India, is the country’s first TReDS Platform that provides registered MSMEs with recourse free, trusted receivables payments within 48 hours. RXIL processes about INR 1000 crores every month, thereby, driving the speed of financing and revival for MSMEs.

Read more: https://ibsintelligence.com/ibsi-news/5-fintech-companies-helping-msmes-scale-their-businesses/

31-Aug-2021 Factoring regulation, a boost to cash-starved MSMEs

BusinessLine organises webinar on ‘How Banks Can Boost MSME Growth During the Pandemic’ The Factoring Regulation (Amendment) Act 2021, which has widened the scope of the entities that can engage in the factoring business, will significantly boost the funding availability to cash-starved MSMEs in the country, said a senior official of a TReDS (Trade Receivables Discounting System) platform. “In the last 3-4 years, we have seen that banks on the TReDS platform prefer only the best-rated corporates. But the Factoring Act amendment has allowed participation of non-banking finance companies (NBFCs) in the TReDS platform. When NBFCs come into the platform, they will start discounting even for the low-rated corporates and that will significantly boost funding availability for MSMEs,” said Ketan Gaikwad, Managing Director and CEO, Receivable Exchange of India (RXIL).

Read more: https://www.thehindubusinessline.com/news/national/factoring-regulation-a-boost-to-cash-starved-msmes/article36210479.ece

07-Aug-2021 RXIL aims to process invoices worth at least ₹10,000 crore in its TReDS platform this fiscal

Expect to ride on economy's rebound, says MD & CEO Ketan Gaikwad

Receivables Exchange of India Ltd (RXIL), a joint venture between SIDBI and National Stock Exchange (NSE), expects to process MSME and corporate invoices worth at least ₹10,000 crore at its digital TReDS platform this fiscal, Ketan Gaikwad, Managing Director & CEO has said. In the last fiscal, the total value of invoices processed by the company under its TReDS platform stood at ₹ 6,500 crore. The optimism that the company will be able to discount invoices worth at least ₹10,000 crore this fiscal comes from the economic rebound seen in the country in recent months, Gaikwad told BusinessLine. “We feel ₹10,000 crore is doable this fiscal as economy is on a rebound. We feel that there will be a V-shaped recovery. Despite challenges we face there is a growing demand. The recent factoring law passage will also bring more NBFCs who will add value,” he said.

Read more: https://www.thehindubusinessline.com/economy/rxil-aims-to-process-invoices-worth-at-least-10000-crore-in-its-treds-platform-this-fiscal/article35768672.ece

27-Jul-2021 Factoring regulation bill gets the go-ahead; IBC bill tabled

The Lok Sabha (LS) on Monday passed a key legislation meant to make it easier for small businesses to monetize their receivables even as Union finance minister Nirmala Sitharaman tabled another bill on bankruptcy resolution of small businesses. The Factoring Regulation (Amendment) Bill, which was tabled in Parliament last year, was passed on Monday. The bill seeks to liberalize the participation of non-banking financial companies (NBFCs) in the factoring business. It also removes the requirement of an entity in this business called factor to report every transaction within 30 days. The bill proposes that such finer details will be specified in regulations.

Read more: https://www.livemint.com/politics/policy/ibc-amendment-bill-tabled-in-lok-sabha-factoring-regulation-bill-cleared-11627313220707.html

27-Jul-2021 Factoring Regulation (Amendment) Bill is a welcome move by govt: CEO, RXIL

The Factoring Regulation (Amendment) Bill is a welcome move by the government which will now enable NBFCs other than the seven RBI-licensed NBFC factors previously allowed, said Ketan Gaikwad, MD & CEO, Receivables Exchange Of India (RXIL). The Factoring Regulation (Amendment) Bill, which was tabled in Parliament last year, was passed on Monday. The bill seeks to liberalize the participation of non-banking financial companies (NBFCs) in the factoring business. It also removes the requirement of an entity in this business called factor to report every transaction within 30 days. The bill proposes that such finer details will be specified in regulations.

Read more: https://knnindia.co.in/news/newsdetails/economy/factoring-regulation-amendment-bill-is-a-welcome-move-by-govt-ceo-rxil

26-Jul-2021 Lok Sabha passes Factoring Regulation (Amendment) Bill; to help expedite MSME payments

Credit and Finance for MSMEs: Introduced in Lok Sabha in September last year, the bill seeks to broaden the participation of entities undertaking factoring. Mature factoring markets, more specifically Europe, continue to dominate the factoring market, accounting for 68% of global factoring. The factoring market worldwide is projected to reach $9.2 trillion by 2025. The share of MSEs in India’s gross bank credit in June improved after a five-month decline. Credit and Finance for MSMEs: Lok Sabha on Monday passed the Factoring Regulation (Amendment) Bill, 2020 amid protest from the Opposition, to amend the Factoring Regulation Act 2011. Introduced in Lok Sabha in September last year, the bill will help micro, small and medium enterprises (MSME) tide over their issue of delayed payments as it seeks to broaden the participation of entities undertaking factoring. The bill is also likely to enhance traction on the TReDS platform introduced by the Reserve Bank of India back in 2014 for entrepreneurs to unlock working capital tied in their unpaid invoices. According to the government’s delayed payments monitoring portal MSME Samadhaan, over 83k delayed payment applications have been filed by micro and small enterprises, as of July 26, 2021, involving Rs 22,311 crore, of which 7,920 applications involving Rs 1,433 crore were disposed.

Read more: https://www.financialexpress.com/industry/sme/msme-fin-lok-sabha-passes-factoring-regulation-amendment-bill-to-help-expedite-msme-payments/2297989/

09-Jul-2021 CPSEs dragging feet on bill discounting via TReDS despite govt directive; share remains minuscule at 7%

Credit and Finance for MSMEs: From three per cent till March 2020, bill discounting by Central Public Sector Enterprises on the three TReDS platforms increased to seven per cent amounting to Rs 2,924 crore. invoice discounting, factoring, CPSEs, TReDS, Central Public Sector Enterprises, MSME Ministry, MSME Secretary A.K. Sharma, MSME Secretary, A.K. Sharma, Ketan Gaikwad Receivables Exchange of India, Ketan Gaikwad RXIL, CII National MSME Council, Sundeep Mohindru M1xchange, Sundeep Mohindru, M1xchange, Union Minister, Nitin Gadkari, Prakash Sankaran Invoicemart, Prakash Sankaran, Reserve Bank of India, Trade Receivables Discounting System, liquidity crunch, MSMEs, payment delays, Receivables Exchange of India, RXIL, Mynd Solution, M1xchange, Invoicemart, A.TReDS, Axis Bank, mjunction services Not even 30 per cent of the CPSEs who have onboarded any one of the TReDS platforms transact on it. Credit and Finance for MSMEs: The MSME Ministry in November 2018 mandated all companies with a turnover of more than Rs 500 crore and above and Central Public Sector Enterprises (CPSEs) to register on the RBI-regulated Trade Receivables Discounting System (TReDS). This was intended to be a game-changer in solving the liquidity crunch faced by MSMEs due to payment delays by their corporate and government buyers. Three years on, public sector firms are still refraining from using the TReDS platform.

Read more: https://www.financialexpress.com/industry/sme/cpses-dragging-feet-on-discounting-via-treds-despite-govt-directive-govt-firms-share-remains-minuscule-at-7/2287187/

07-Jul-2021 India’s small businesses are getting crushed under a mountain of receivables

Alouk Kumar shows up over a video call from his office in Noida. Behind his work desk is a board with a distinctive message pinned on an A4-sized sheet: “Think big. Keep re-inventing". These days, he isn’t able to do either of those things. In 2019, Inductus Ltd, his consulting company, worked on the implementation of a project run by a large engineering firm for over a month. Inductus deployed 20 people at different sites and when the project was finished, the firm raised an invoice of ₹1.5 crore. Cut to 2021, the payment remains pending. Every time Kumar nudges his customer’s procurement team, he is offered a new reason for the delay: “Our offices are closed"; “Our employees can’t access (the) payments portal remotely"; “We have a shortage of employees".

Read more: https://www.livemint.com/industry/manufacturing/how-unpaid-dues-strangle-small-firms-11625585319801.html

07-Jul-2021 Setback for MSMEs, state-run companies hesitant of adopting TReDS despite govt diktat

The government’s move to get public sector companies on the Trade Receivables Discounting System (TReDS) — a central bank-backed invoice discounting regime — to improve liquidity with small businesses has made little headway with many state-run firms yet to conduct a single transaction on these platforms. As per data accessed by ET, of the total transaction volume of about Rs 36,000 crore conducted by the three TReDS exchanges in India so far, only Rs 2,700 crore was from central public-sector enterprises (CPSEs). At the heart of the problem is the pace at which CPSEs approve invoices, said Sundeep Mohindru, the chief executive officer of M1Xchange, a TReDS platform. These companies often take 45-60 days to approve invoices. By this time, the CPSEs also usually settle the payment.
 

Read more at: https://economictimes.indiatimes.com/small-biz/sme-sector/state-run-companies-hesitant-of-adopting-treds-despite-govt-diktat/articleshow/84185564.cms

20-Jun-2021 At least Rs 15 lakh cr stuck in MSME payments annually, dues cleared typically in 3-6 months: Experts

Credit and Finance for MSMEs: The second wave of the pandemic, which exposed vulnerabilities of MSMEs like never before, had aggravated their issues such as delayed payments, high informality, and low financial resilience. The government’s plan, as outlined in the Union budget for 21-22, is to create an ARC and an AMC to take over and resolve bad loans. The scheme has been extended multiple times from October last year to November followed by March 2021, June 2021, and currently till September 2021. Credit and Finance for MSMEs: At least Rs 15 lakh crore is stuck in payments to MSMEs each year with payments typically made in three-six months in contravention of the MSMED Act, according to industry experts. The second wave of the pandemic, which exposed vulnerabilities of MSMEs like never before, had aggravated their issues such as delayed payments, high informality, and low financial resilience. “Market-driven solutions such as mainstreaming receivables discounting especially through the ‘soon to be tabled’ factoring amendment bill and supply chain financing solutions that incentivise large buyers to initiate supply chain financing for their MSME suppliers,” were recommendations by experts during a roundtable organised by the Global Alliance for Mass Entrepreneurship (GAME) to alleviate payment-related challenges.

Read more: https://www.financialexpress.com/industry/sme/msme-fin-at-least-rs-15-lakh-cr-stuck-in-msme-payments-annually-dues-cleared-typically-in-3-6-months-experts/2274889/

11-May-2021 RXIL partners with TSS Consultancy for C-KYC for smooth onboarding of MSMEs

RXIL has partnered with TSS Consultancy Private Limited to subscribe to TrackWizz CKY ..

Read more at: https://bfsi.economictimes.indiatimes.com/news/fintech/rxil-partners-with-tss-consultancy-for-c-kyc-for-smooth-onboarding-of-msmes/82542773

11-Apr-2021 TReDS can be a lifeline for small businesses

Micro, small and medium enterprises (MSMEs) are vital towards building a $5 trillion economy. The pandemic saw many MSMEs face a massive liquidity crunch, and this makes TReDS (Trade Receivables Discounting System) a key platform to revive the economy by providing financing to small businesses. Central public sector enterprises (CPSEs) are mandated by the government to procure at least 25 per cent of their purchases from MSMEs and to register on TReDS. Since the government and its CPSEs are the single largest institutions that procure from MSMEs, their potential to promote its use and grow ...

Read more: https://www.business-standard.com/article/opinion/treds-can-be-a-lifeline-for-small-businesses-121041100735_1.html

09-Apr-2021 At ₹1,000 cr, RXIL records highest monthly transaction volume in March

Receivables Exchange of India Ltd (RXIL), on Tuesday, said it recorded the highest monthly transaction volume of more than ₹1,000 crore in March in terms of discounting invoices of micro, small and medium enterprises (MSMEs).

The Trade Receivables Discounting System (TReDS) platform, in a statement, said the growth in transaction volumes from ₹69 crore in April 2020 to ₹1,105 crore in March 2021 mimics the revival and resumption of economic activity.

Throughput

RXIL logged a throughput of more than ₹6,500 crore by way of discounting of invoices of MSMEs in FY21, the statement added.

On a cumulative basis, RXIL said it processed throughput of more than ₹10,000 crore since inception in 2017.

Read More at: https://www.thehindubusinessline.com/money-and-banking/at-1000-cr-rxil-records-highest-monthly-transaction-volume-in-march/article34253130.ece

08-Apr-2021 TReDS platform RXIL discounts receivables worth Rs 1,000 crore in a month
By:  | 
April 6, 2021 4:01 PM

From transactions worth Rs 69 crores in April 2020, RXIL reached a whopping Rs 1,105 crore in March 2021.

The RBI accredited TReDS (Trade Receivables Discounting System) Exchange Platform was doing transactions worth Rs 69 crores in April 2020 and reached a whopping Rs 1,105 crore in March 2021, the firm’s MD and CEO Ketan Gaikwad told Financial Express Online.

Read more at: https://www.financialexpress.com/industry/sme/treds-platform-rxil-discounts-receivables-worth-rs-1000-crore-in-a-month/2228011/

 

16-Feb-2021 The TReDS route to trade credit

 

A Parliamentary Standing Committee wanting to make the Trade Receivables Discounting System (TReDS), an online factoring platform, mandatory for all the arms of the central and state governments makes eminent sense. This is a necessary but insufficient condition to infuse life into the MSME sector, hit hard by demonetisation, the subsequent slowdown and, then, the pandemic. Already, all companies with a turnover of ?500 crore have to mandatorily register on TReDS. Adding to this lot the railways and defence, with huge outstanding payments to MSMEs, will help ease the latter’s working capital shortage.

Failure to come on to the TReDS platform, which puts an end to the monopsony power of large buyers vis-à-vis small vendors, must be declared an offence. This will ensure compliance. Around 20,000 MSMEs and 1,600 buyers (with a turnover of over ?500 crore) are now registered on TReDS. The total value of dues settled over the platform is estimated at over ?30,000 crore. The process involves small suppliers raising invoices on large buyers, with participating banks and non-banking financial companies carrying out factoring, that is, taking over the bill collection and paying small suppliers their dues upfront minus a discount pegged to the creditworthiness of the large buyer, to whom the finance provider turns creditor. Realising the full potential of TReDS will reduce working capital costs and boost liquidity.

However much TReDS smoothens MSME access to trade credit, the sector still needs more capital, preferably as equity that needs to be serviced only when profits are made. The fund of funds, announced by the government last May, was meant to mobilise over ?50,000 crore to invest in MSMEs. It must be operationalised swiftly.

 

Read more at: 

https://economictimes.indiatimes.com/blogs/et-editorials/the-treds-route-to-trade-credit/

 

 

16-Feb-2021 Over Rs 26k crore MSME dues cleared during May-Dec 2020 but govt can’t force buyers to pay: MoS Finance

 

Credit and Finance for MSMEs: 4,72,035 invoices involving Rs 10,285 crore were discounted via TReDs platform from April till December 2020. TReDs allows MSMEs to discount their invoices and raise short-term credit from banks to tide over their delayed payment issue.

Credit and Finance for MSMEs: Central ministries and central public sector enterprises (CPSEs) have cleared MSME dues worth Rs 26,821.08 crore during the May-December 2020 period, according to the Finance Ministry’s data. The total dues stood at Rs 34,506.09 crore while dues pending amounted to Rs 7,685.01 crore during the period. The highest procurement by 26 ministries and 105 CPSEs was made worth Rs 6,499.92 crore in December out of which Rs 4,821.90 crore was cleared to MSMEs while Rs 1,678.02 crore was pending at the end of the month. Ministry of Communications, Heavy Industries and Public Enterprises, Petroleum and Natural Gas, Steel, Power, Coal, etc., had received the majority applications for delayed payments by micro and small enterprises, according to the latest data available at the delayed payment monitoring system MSME Samadhaan.

“The Ministry has taken up the subject vigorously with the Central Ministries, Central Public Sector Enterprises (CPSEs) and State Governments and the Corporate entities. But, it is to be noted that the Central Government cannot issue any directions to, or force, State Governments or State PSEs to pay the dues,” MoS Finance Anurag Singh Thakur said in a written reply to a question in the Lok Sabha recently sharing data on the dues cleared. The MSME Ministry had written to 500 corporates in September and another 2,800 such businesses in October to clear pending MSME dues in the respective month.

The procurement by ministries and CPSEs in December had increased nearly 3X from Rs 2,349.52 crore of goods and services procured from MSMEs in May, according to the data shared by Singh. While the Finance Minister Nirmala Sitharaman had asked government entities in May last year to clear MSME dues within 45 days, the Department of Expenditure had issued an Office Memorandum in July mandating buyers to pay penal interest of 1 per cent per month for delayed payments beyond the prescribed duration till the date of such payment.

The government had also urged buyers to on-board the Trade Receivables Discounting System (TReDS) platform, which offers MSMEs an option to discount their invoices and raise short-term credit from banks to tide over their delayed payment issue. According to the data shared by Singh, 4,72,035 invoices involving Rs 10,285 crore were discounted via TReDs platform from April till December 2020.

 

 

Read more at:

https://www.financialexpress.com/industry/sme/msme-fin-over-rs-26k-crore-msme-dues-cleared-during-may-dec-2020-but-govt-cant-force-buyers-to-pay-mos-finance/2195699/

 

 

 

 

 

16-Feb-2021 Compulsory TReDS to ease payment woes for MSMEs, small companies

 

MUMBAI: The money troubles for MSMEs and small vendors dealing with various government agencies might ease soon as New Delhi ‘factors in’ major changes to the way it pays its billers. The Centre is seeking to cut through swathes of bureaucracy and speed up bill payments by getting its departments to compulsorily adopt the Trade Receivable Discounting System or TReDS. For the government, quick vendor payments should enhance competitive intensity — and lower its costs.

 

 

Read more at: 

https://economictimes.indiatimes.com/small-biz/sme-sector/compulsory-treds-to-ease-payment-woes-for-msmes-small-cos/articleshow/80947583.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

 

13-Feb-2021 India’s Road To Economic Growth Lies In Boosting MSME Financing

 

TReDS platforms can be leveraged to address the more immediate working capital needs of MSMEs

Amid global and domestic economic uncertainty, the 2021 Budget has been eagerly awaited as a blueprint - the government’s vision and strategy to enable a V-shaped recovery. MSMEs, being the key driving force behind the government's vision of Atmanirbhar Bharat, plays a vital role in the recovery.

The MSME-friendly budget will allow the drivers of India’s future to take a leadership role in shepherding the country along the expected path to recovery.

With an emphasis on infrastructure, digital, and capacity building, budget 2021 will not only encourage investment and support the Atmanirbhar Abhiyan, but also improve the quality of life for citizens with planned expenditure on education, infrastructure, and healthcare systems.

The Rs 1,500 crores allocated by the finance minister to digital payment systems is a step in the right direction. The einvoicing regime is about to start for more than 5 crore turnover companies from 1st April 2021. This will require MSMEs to invest in the required digital infrastructure, educate themselves about the system and its workings.

The need to integrate the MSME strategy with physical and digital infra plans

The coming months hold immense potential for MSMEs and the Indian economy overall. However, there is a need to better integrate the government’s MSME strategy with the general recovery plan for the economy. Both digital and physical infrastructure play key roles here in facilitating a sustainable environment for MSMEs.

The government’s Atmanirbhar package investment amounts to 13 per cent of the GDP, which comes to Rs 27 lakh crore. As infrastructure development is one of the five Atmanirbhar pillars, this represents a sustained increase in core infrastructure spend over the next couple years, facilitating improved transportation, energy, and digital infrastructure, addressing key costs which hamper economic activity in India.

Synergizing MSME-specific infra projects with overall Atmanirbhar Bharat Mission and National Infrastructure Pipeline investment (NIP) goals would lead to significantly better outcomes. Electricity and transportation work that takes place in tandem under the NIP would act as a force multiplier for the park infrastructure.

Leveraging TReDS to facilitate investment

In the short-term, raising the finances to enable these projects is a challenge we need to address. The MSME sector has both short-term working capital and long-term project financing needs. As NITI AAYOG chief Amitabh Kant recently pointed out, barring outliers like Air India, most disinvestment projects are in the final stages as of now: a determined push could unlock lakhs of crores to fund long-term infra investment. TReDS platforms can be leveraged to address the more immediate working capital needs of MSMEs.

The way forward

We expect government spending to augment private sector investment in the coming months. This year’s MSME outlay is twice that of 2020, but this needs to go towards building projects and capabilities with immediate benefits to MSME owners, providing a means for sustainable growth for the country and its citizens.

The author is MD and CEO, Receivables Exchange Of India (RXIL)

DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.

 

 

08-Feb-2021 Budget 2021: MSME financing vital to take Indian economy on growth path

 

Amid global and domestic economic uncertainty, the Budget 2021 was eagerly awaited as a blueprint - the government’s vision and strategy to enable a V-shaped recovery. MSMEs have a special role to play here. They’re a key driving force behind the government’s vision of Atmanirbhar Bharat. However, last year’s economic turbulence did create systemic challenges. In 2021, thanks to an MSME-friendly Budget, these drivers of India’s future have the opportunity to take a leadership role in shepherding the country along the expected path to recovery.

With this in mind, we’re deeply appreciative of how Budget 2021 has recognised the greater relevance of both MSMEs and the digital sector. The Rs 15,700 crore allocation will be instrumental in helping the sector re-emerge after the pandemic induced lockdown. With an emphasis on infrastructure, digital, and capacity building, Budget 2021 will not only encourage investment and support the Atmanirbhar Abhiyan, but also improve the quality of life for citizens of across the country with planned expenditure on education, infrastructure, and healthcare systems.

Rs 1500 crore allocated by the Finance Minister to digital payment systems is a step in the right direction. The e-invoicing regime is about to start for more than 5 crore turnover companies from April 2021. This will require MSMEs to invest in the required digital infrastructure, educate themselves about the system and its workings. We expect the funds to be utilised and support extended to the MSME ecosystem in adopting digital infrastructure, with a continued focus on formalisation of the sector.

The need to integrate the MSME strategy with physical and digital infra plans

The months to come hold immense potential for MSMEs and the Indian economy overall. However, there is a need to better integrate the government’s MSME strategy with the general recovery plan for the economy. Both digital and physical infrastructure play key roles here in facilitating a sustainable environment for MSMEs.

The government’s Atmanirbhar package investment amounts to 13 percent of the GDP, which comes to Rs 27 lakh crore rupees. As infrastructure development is one of the five Atmanirbhar pillars, this represents a sustained increase in core infrastructure spend over the next couple years, facilitating improved transportation, energy, and digital infrastructure, addressing key costs which hamper economic activity in India.

Rationalized customs duty takes us part of the way there. However, synergizing MSME-specific infra projects with overall Atmanirbhar Bharat Mission and National Infrastructure Pipeline investment (NIP) goals would lead to significantly better outcomes. For instance, the Budget speech discussed setting up of 7 textile parks as part of the MSME package. Electricity and transportation work that takes place in tandem under the NIP would act as a force multiplier for the park infrastructure.

Leveraging TReDS to facilitate investment

In the short-term, raising the finances to enable these projects is a challenge we need to address. The MSME sector has both short-term working capital and long-term project financing needs. As NITI AAYOG chief Amitabh Kant recently pointed out, barring outliers like Air India, most disinvestment projects are in the final stages as of now: a determined push could unlock lakhs of crores to fund long-term infra investment. TReDS platforms can be leveraged to address the more immediate working capital needs of MSMEs.

The way forward

In the months to come, we expect government spending to augment private sector investment. In that crucial time, MSME-friendly Budget priorities are of vital importance. This year’s MSME outlay is twice that of 2020, but this needs to go towards building projects and capabilities with immediate benefits to MSME owners, providing a means for sustainable growth for the country and its citizens.

 

 

Read more at: 

https://www.cnbctv18.com/views/budget-2021-msme-financing-vital-to-take-indian-economy-on-growth-path-8246351.htm/amp

 

03-Feb-2021 Budget 2021: Reactions from the MSME Sector

 

In a bid to boost the pandemic hit economy, through the multiple investment announcement in the sectors like Health, Infrastructure, Education, Startups, Automobile among others. Finance Minister Nirmala Sitharaman on Monday tabled the first paperless Union Budget for 2021-22 in the parliament.

Here are some reactions of experts from the MSME sector:

Shachindra Nath, Executive Chairman & Managing Director, U GRO Capital:

“Broadly evaluating, the Union Budget 2021 is a significant attempt by the government, to accept a higher fiscal deficit and enhance expenditure towards economic revival. It is appreciative of the government to put a special emphasis on providing relief to the taxpayers and reducing the burden posed by COVID-19. One of the key highlights of the budget is the setting-up of the development finance institution (DFI) towards infrastructure financing and institutional framework to purchase a corporate bond, which would solve the issue of liquidity for the infrastructure sector and corporate bond market. Also, with the path-breaking initiative of instituting Asset Reconstruction Company (ARC) and asset management company (AMC) for NPA consolidation, banks have been allowed to streamline their focus on the much-needed growth.

The government has reduced the threshold for NBFCs to initiate recovery under the SARFAESI Act, 2002. This is an effective step towards ushering credit discipline and in the long-term will increase the penetration of credit to small businesses. The government has also doubled its allocation towards MSMEs, which would greatly support their revival and eventual growth. Holistically, the Union Budget 2021 is an encouraging event, yet we optimistically look forward to distinctive support for NBFCs, with a framework to provide them sufficient liquidity, while also furthering the credit guarantee scheme support to the MSMEs.”

Mr. Samir Bhatia, Founder & CEO, SMEcorner:

“The Hon. Finance Minister has presented a budget which will provide tremendous stimulus to the economy, and in particular, the MSME segment. An increase in import duties for certain products and rationalization of duties in the case of many items manufactured by MSMEs will help the local industry compete against imports and boost their revenues.  Besides, other changes such as increasing the limit for tax audit to 10crs of annual turnover for ‘digital’ MSMEs is a very welcome step.  Overall, the budget will provide a major impetus to all sectors of the economy which was much needed.  I give 100/100 to this budget!”

Mr. Shubhradeep Nandi, CEO & Co-Founder, PiChain Labs:

“Doubling of allocation for MSME will hopefully be a great boost towards new employment generation post the very challenging covid period that had seen poor demand & job cuts.”

Mr. Arjun Ranga, Managing Director, Cycle Pure Agarbathi:

“The doubling of MSME allocation to Rs 15,700 crore is a well-planned strategy to boost the sector and bring it to pre-covid levels. This budget will also strengthen our local handicraft market and support the artisans in this sector. The improved credit access for enterprises will also uplift the industry and generate employment in the country.”

Mr. Sanjeev Singhai, Founder of WellnessTA & National VP of MSME and Start-up forum – Bharat: 

“Kudos to our bold Prime Minister, under whose leadership the Hon’ble Finance Minister continues to steer the Indian Economy through difficult times of the pandemic. The stamp of commitment to make India a $5 trillion economy is very evident in this budget as the FM continues with her economic reforms. New announcements to support MSMEs and Startups with policies and reliefs are welcome steps.

The announcement of Rs. 10,000 cr fund to support private equity and Rs. 5,000 cr VC Funds for distressed MSME assets along with Rs. 15,700 cr provisions MSME sector showcases Government commitment to support these two sectors. Extension of tax holidays for a year and capital gain exemptions are a welcome step. This will significantly help MSMEs and Startups to regain the lost grounds due to pandemic, step up manufacturing, exports and to create more employment in the country.” 

 

Read more at: 

https://techgraph.co/budget-2021/budget-2021-reactions-from-the-msme-sector/

01-Feb-2021 Budget 2021: Health, education sector happy, real estate experts skeptical

 

Experts in the health and education sector are happy with the provisions and policies announced in the Union Budget in the parliament on Monday. However, real estate experts are skeptical.

 

The experts in the healthcare and pharmaceutical fields have welcomed the Union Budget presented by Finance Minister Nirmala Sitaraman on Monday. While the real estate industry has expressed displeasure over negligence to the sector, experts in education sector are happy with the measures announced.

Abhay Soi, Chairman and Managing Director, Max Healthcare, said the focus on healthcare is a gigantic step. “The announcement of the centrally funded scheme -- Aatmanirbhar Health Yojana with an outlay of Rs 64,180 crore over six years in addition to National Health Mission is a welcome step towards strengthening primary, secondary, and tertiary healthcare,” he said. “However, the manner in which this allocation will be made in the next five years will be critical.”

Dr. Anand Bansal, Medical Director at Action Group of Hospitals, echoed Soi. He said the amount of Rs 35,000 crore announced for the COVID-19 vaccine will strengthen this fight against the pandemic. “As per health concerns this budget is satisfactory and full of vision, considering the challenges our healthcare is facing, things will surely need time to reflect results on a larger scale.”

Cdr Navneet Bali, Regional Director, Northern India, Narayana Health said the budget has announced the paradigm shift in the way one looks at health and wellness. He lauded the steps for setting up of health and wellness centres in rural and urban India, having integrated public health labs, having a nationwide Pneumococcal vaccine which will prevent deaths of over 50000 children, clean air missions in 42 urban areas with a million-plus population and setting up of critical care hospital blocks in 602 districts. “These all are very important steps which will strengthen our healthcare,” he said.

 

Read more at: 

https://www.indiatoday.in/business/budget-2021/story/union-budget-2021-health-education-real-estate-reaction-nirmala-sitharaman-1764984-2021-02-01

01-Feb-2021 Budget 2021: MSMEs welcome new customs duties and incentives for digitisation

 

FM Nirmala Sitharaman allocated Rs 15,700 crore to the MSME sector, besides laying a special framework of Data Analytics, ML, and AI to assist MSMEs. Here's how India's MSME sector and its stakeholders are reacting.
 

In her Union Budget speech, FM Nirmala Sitharaman allocated Rs 15,700 crore to the MSME sector, besides laying a special framework of Data Analytics, Machine Learning (ML), and Artificial Intelligence (AI) to assist the sector. 

“We have taken a number of steps to support the MSME sector in this Budget. I have provided Rs 15,700 crore to the sector, which is more than double of last year,” she said. 

The government has committed nearly Rs 1.97 lakh crore over five years, starting this fiscal year, for Production Linked Incentive (PLI) Schemes to create manufacturing leaders for an Aatmanirbhar Bharat.

Further, to boost digital transactions, Sitharaman earmarked Rs 1,500 crore for a proposed scheme to provide financial incentives to promote digital modes of payment among MSMEs.

To boost the local textile industry and help India become one of the leading manufacturers of textiles in the world, FM Nirmala Sitharaman in Union Budget 2021 announced the establishment of seven textile parks. 

Sitharaman also announced a slew of changes in customs duties in a bid to boost local manufacturing. She explained that since last year, the government is overhauling the structure of customs duties and has eliminated 80 outdated exemptions.

MSME sector likely to benefit - Sandip Chhettri, COO, TradeIndia
 

The extension in capital gains exemption by one year is a move that will help businesses recover from the brunt of the pandemic. As far as MSMEs are concerned, it is good news that the Centre has decided to double the allocation for the sector. The government now plans to set aside Rs 15,700 crore in FY22, and if this decision is implemented wisely in the coming days, the sector would definitely benefit.

Setting up textile parks a positive step - Rohan Gupta, MD, Gargee Designers

The setting up of textile parks is a positive step towards creating jobs and giving local manufacturers a boost. It will also increase exports. It is a comprehensive way of boosting the income of our skilled weavers and manufacturers. The Budget also gives a helping hand to small producers through boosting cotton and silk raw material producers as well as fabric manufacturers.

Doing business to become easier for MSMEs - Rahul Garg, CEO and Founder, Moglix

The 2021 Union Budget takes a calibrated approach in shaping the government’s fiscal policy and responding to opportunities and challenges on our way towards being self-reliant over the long term. The outlay for the National Infrastructure Pipeline (NIP) will increase the scale and strength of India’s supply chain infrastructure

The special framework for easy exit and duty alterations will augment the ease of doing business for MSMEs, enabling small businesses of today to become global manufacturers of tomorrow.

Budget 2021 a much-needed lifeline for MSMEs - Vaibhav Patil, Director of Finance, eZee Technosys

The MSME sector, which was battered by COVID-induced lockdowns, needed a lifeline. By increasing their threshold for capitalisation, such companies will get certain relief and exemptions provided by the government. The government will also be able to route emergency credit to this sector.
 

The finance minister also mentioned about minimum wages being applied to all categories of workers. However, many MSMEs might not be able to make the pay-hike mandate work without laying off employees or not hiring them in the first place. We have to wait and watch how the government implements this over a period of time.

A comprehensive, well-rounded Budget - Shyam Sunder Aggarwal, Managing Director, Bikano

The government must be congratulated for a comprehensive Budget in what was an extremely taxing economic backdrop. Along with disinvestment, Atmanirbhar Bharat initiatives, and production-linked incentive’s (PLI) with a special focus on 13 sectors, India can generate sufficient and sustainable employment.

This would lead to stable incomes and higher purchasing power, which would, in turn, generate demand for FMCG and food products and services.

Incentivising digital payments to go a long way - Manish Patel, Founder and CEO, MSwipe

Small retailers and kiranas were instrumental in growing the share of digital payments in India and in providing easy payment solutions to their customers since the onset of COVID-19. The Budget provision of Rs 1,500 crore to incentivise digital modes of payments comes as a recognition of these efforts and will go a long way in encouraging MSMEs to switch to accepting digital payments.

The announcement has met the industry’s expectation of providing financial incentives for MSMEs to adopt digital solutions.

New custom duty structure a relief - Vinay Jain, Founder and CEO, Grafdoer

The Union Budget FY 21-22 has brought a ray of hope. The new custom duty structure that has been introduced on steel products is a relief as it has reduced duties on copper from 5 percent to 2.5 percent. It has also cut duty on copper scrap from 5 percent to 2.5 percent, and exempted duty on steel scrap for a specified period.
 

The sanitaryware industry has seen a hike in the products comprising of metal constituents, but now, manufacturers are likely to see stability in the pricing of the products.

Local industries can fight imports -  Samir Bhatia, Founder and CEO, SMEcorner

An increase in import duties for certain products and rationalisation of duties in the case of many items manufactured by MSMEs will help local industries compete against imports and boost their revenues. Other changes such as increasing the limit for tax audit to Rs 10 crore of annual turnover for ‘digital’ MSMEs is a welcome step. The budget will provide a major impetus to all sectors of the economy.

An unwavering show of support to MSMEs - Ketan Gaikwad, MD and CEO, Receivables Exchange Of India (RXIL)

The allocation of Rs 15,700 crore will be key for this sector that is emerging from the pandemic induced lockdown. This Budget is an unwavering show of support for MSMEs and will not only encourage investment and support the Atmanirbhar Abhiyan, but also develop the quality of life for citizens of the country.

We are glad that the Finance Minister has allocated Rs 1,500 crore to promote digital payments in the country. Further details are awaited, and we expect the funds to be well-utilised and support extended to the MSME ecosystem in adopting digital infrastructure, with a continued focus on formalisation of the sector.”

Incentivising digital payments a gamechanger - Sonakshi Nathani, Co-founder and CEO, Bikayi

As a WhatsApp-integrated startup catering to MSMEs, we welcome the decision of doubling MSME allocation. In the past six months with lockdown restrictions, we have seen increased adoption of digital mediums to run businesses. However, lack of understanding, ease of use and incentives, restricts these businesses to explore them further.

Hence, the decision to promote digital transactions and attach financial incentives to promote a digital mode of payment will be a gamechanger in the MSME segment, specifically for local e-commerce players.

 

Read more at:

https://yourstory.com/smbstory/budget-2021-msme-reaction-custom-duties-digital-incentives

 

 

29-Jan-2021 TReDS was touted as the tool to tackle delayed payments to MSMEs. Did it succeed?

Synopsis

TReDS was supposed to be a game changer-a platform that could sort out the issue of delayed payments for MSMEs. Almost five years later, the achievements may have fallen short.

 

Read more at: 

https://economictimes.indiatimes.com/small-biz/money/treds-was-touted-as-the-tool-to-tackle-delayed-payments-to-msmes-did-it-succeed/articleshow/80551986.cms

27-Jan-2021 Payments Startups Demand Subsidy On Zero MDR, Lower GST On Digital Payments From Union Budget 2021

 

  • Payments startups want the government to either remove zero MDR policy or subsidise it to make it financially viable for them
  • The Union Budget should promote POS Transactions over ATMs by introducing a favourable policy for the former
  • Besides a self-regulatory organisation, the government should form a Central Agency to investigate digital frauds to ensure data security and privacy
Union Budget 2021

India’s fintech sector has been on a roll for sometime. In 2020, out of 900+ startup deals and $11.5 Bn total funding, fintech topped the chart with $2.1 Bn worth of funding across 131 deal counts, according to Inc42 plus Annual Indian Tech Startup Report 2020.

Within the fintech space, payments remains the largest subsector in terms of the total number of startups.

With UPI payments leading from the front, the value of digital payments in India is expected to grow over three-folds to INR 7,092 Tn by 2025 from around INR 2,162 Tn in 2019-20, according to Bengaluru-based consultancy firm RedSeer.

The RBI data too reveals that between 2015-16 and 2019-20, digital payments (volume) have grown at a compounded annual growth rate (CAGR) of 55.1% – from 593.61 Cr in FY16  to 3,434.56 Cr In FY20.

However, there are a number of issues that the Indian payments industry has been facing.

Ahead of the Union Budget 2021, the industry expects the finance minister to address some of the pressing issues that halt the growth of India’s digital payments sector. Here’s a list of industry demands:

Subsidy On MDR And POS Payments

Commenting on the Union Budget 2021, Harshil Mathur, CEO & cofounder of payments startup Razorpay said, “I’m hoping that in the upcoming budget, the government will think of alternatives to the Zero MDR policy. One of the alternatives could be providing tax incentives for MSMEs towards accepting digital payments, as that will help promote e-payments and drive significant digital adoption amongst businesses. Initiatives like these will also lead to new innovations in the payments infrastructure, thereby creating solutions and tools that respond to both, shifting customer demands and need for customised solutions for MSMEs.”

The MDR (merchant discount rate) is the transaction cost paid by merchants to issuers, acquirers and merchant aggregators. In December 2019, the Indian government had introduced zero MDR for UPI and RuPay which stated that business establishments with an annual turnover of more than INR 50 Cr shall have to compulsorily offer low-cost digital modes of payment to their customers and that zero MDR shall be imposed.

While the MDR charges were nearly zero for below INR 2,000 UPI transactions since 2017, it was in December 2019, the government introduced zero MDR on UPI and RuPay transactions for businesses above INR 50 Cr of annual turnover.

But this policy has made UPI transactions a loss-making proposition for the industry.

While Ketan Doshi, MD, PayPoint India demanded that zero MDR practice must be repealed, Dilip Modi, founder of Spice Money said, “While encouraging initiatives such as PIDF by RBI have already been announced, we expect the government to announce a subsidy on MDR and POS devices in the upcoming budget. Waivers on MDR and POS are important to encourage the expansion of these services via the banking correspondents (BC) network. Accessibility of financial services is a major gap in financial inclusion, and POS terminals would be more sustainable than ATM infrastructure in semi-urban and rural areas.”

Elaborating the same, Mandar Agashe, founder, MD and vice-chairman of Sarvatra Technologies stated that the PoS terminal is financially, infrastructurally, and operationally far more affordable and far less demanding than an ATM. However, with just 4 Mn POS machines active in the country, the budget should consider giving tax incentives to banks and fintech companies on the purchase of these machines. Aghase also demanded tax breaks in GST for merchants providing digital payments and incentives for companies helping build a digital infrastructure for friction-free digital on boarding.

Remove GSt On Transactions Made Through Banking Correspondents

While urban customers are reaping the benefits of UPI and mobile banking services, the Business Correspondents (BC) Industry-the last mile in branchless banking- is hoping that the upcoming budget will implement the recommendation of the RBI constituted High-Level Committee on Deepening of Digital Payments, headed by Nandan Nilekani. The Nilekani Committee had recommended making BC originated and terminated transactions of IMPS and AEPS exempt from GST. These transactions currently face GST at an effective rate of 27%.

Sunil Kulkarni, CEO and head of Business Correspondent Federation of India (BCFI) averred, “Considering the business correspondent’s fraternity serves the lower bracket of the income pyramid, the tax bracket is very high. Additionally, for better penetration of financial services to the masses, BC’s should be permitted to offer products and services of more than one or two banks. The industry has already witnessed the critical role of BC’s.”

Explaining the challenges of operating in smaller towns of India, Anand Kumar Bajaj of PayNearby said, “93% of our business correspondent network has been committed to working in tier 2 and tier 3 towns, serving as the sole point of cash disbursal in locations with limited financial infrastructure. However, the commission rates for BC services are very low to make it a profitable business. Additionally, BCs, by default, come under the 27% GST and 5% TDS on cash withdrawal even after the Taxation and Other Laws (Relaxations and Amendments of certain Provisions) Act 2020 having enabling provisions. This makes it difficult for them to stay afloat.”

The founders and CEOs of several other payments companies like Spice Money, BharatPe, RapiPay and PayNearby have also demanded some form of tax relief for the sector.

Time To Create A Regulatory Body

Since the Finance Act, 2017 proposed an independent Regulatory Board (PRB) by amending the Payments and Settlements Act, the RBI and the government have not been on the same page. Three years later, the RBI proposed to set up a self-regulatory organisation (SRO) by April 2020 to improve security, customer protection and pricing in India’s digital payment system.

The RBI, in its report, noted, “With substantial growth in digital payments and maturity gained by entities in the payment ecosystem, it is desirable to have a Self-Regulatory Organisation (SRO) for orderly operations of the entities in the payment system. The RBI will put in place a framework for establishing an SRO for the digital payment system by April 2020 with a view to fostering best practices on security, customer protection and pricing, among others. The SRO will serve as a two-way communication channel between the players and the regulator/supervisor.”

While multiple startups have welcomed this move of creating an SRO, they demand a fast implementation of the recommendation. BharatPe’s Grover thinks that the establishment of a regulatory body that can report and manage the malpractices existing in the segment is the need of the hour. “I think that the government should explore the option of forming a Central Bureau for investigating digital fraud, develop a centralised system for reporting fraudulent practices and ensure data security and privacy for the industry and consumers.”

Rajeev Agarwal founder and CEO of Innoviti Payment solutions averred that since most fintechs are creating value by adding services on top of rails built by banks, the government should explore setting up a central, aggregated certification agency, that can certify fintech applications across all banks, providing them with the flexibility to choose the rail, while minimizing the expense they need to incur in carrying out multiple certifications. “This will also allow for a superior quality-of-service (QoS) norm in financial services from banks in the long run, as players can easily switch between the banks based on QoS.  This in turn will lead to better pricing, increased competition, and lower cost of service for end consumers,” he said. 

Enable Payments Tracking

Besides the Digital India campaign, the Modi government has taken a slew of initiatives such as demonetisation, GST, DBT (Direct benefit transfer) and Fastag, which have helped push digital payments in a big way.

Agreeing to the exponential growth of digital payments, Narayan ‘Naru’ Ramamoorthy, chief revenue officer at Global PayEX, however, thinks that there is a lot that still needs to be done to promote adoption of AI.

AI can digitize B2B processes at scale – speed, costs, and productivity. Companies doing business in India have a tremendous opportunity to leverage AI across the B2B process flows, right from purchase order (PO) to payments and reconciliation. While e-invoicing is a great first step by the Government of India which will enable AI-led digitisation of invoice acceptance and reconciliation processes for buyers, the next step is to enable tracking payments.

“If payment data becomes available, AI can help track key metrics, such as Days Payments Outstanding (DPO) and Days Sales Outstanding (DSO) across receivables and payables and start providing actionable insights for companies and the economy as a whole. This will also help address the key issue for MSMEs– getting paid on time, besides enabling digital lending through cash flow, payment, and invoice data,” said Ramamoorthy.

Invest In Strengthening Digital Infrastructure

Under the Payments and Settlement Systems Act, an RBI-regulated electronic platform called Trade Receivables Discounting System (TReDS) has been introduced for facilitating the financing / discounting of trade receivables of Micro, Small and Medium Enterprises (MSMEs) through multiple financiers. While MSMEs can participate as sellers, corporates, government bodies, PSUs and any other entity can participate as buyers on TReDS. The platform not only helps bring in the buyers and sellers together but also digitises the entire payments structure for MSMEs, ensuring easy access to the working capital loans for them.

However, MSMEs need a further push to adopt the TReDS platform for e-invoicing purposes, feels Ketan Gaikwad, the CEO and MD of RXIL. According to Gaikwad, “We expect the amendments to Factoring Act to be passed and NBFCs other than NBFC-Factors to be allowed as financiers on TReDS. This would open up TReDS for a vast number of MSMEs on whose lower-rated buyers, the legacy financiers were not comfortable placing bids. Another important change we are counting on is the time-bound integration of e-invoicing & GST.”

Sarvatra’s Agashe on the other hand, demands the creation of a dedicated fund to strengthen the digital infrastructure of co-operative banks across the country. This fund will offer a big boost to a more inclusive financial system. “Budgetary concessions such as a GST waiver for digital transactions along with incentivisation, especially in semi-urban and rural India will further augment cashless payments, adds Agashe.

 

Read more at: 

https://inc42.com/infocus/union-budget-2021/payments-startups-demand-subsidy-on-zero-mdr-lower-gst-on-digital-payments-from-union-budget-2021/

18-Jan-2021 Budget 2021 Expectations: MSMEs seek extension of credit guarantee scheme, interest subvention coverage

Union Budget 2021 Expectations for MSMEs: The government had waived the onboarding fee of Rs 10,000 on TReDS platforms in September last year till March 2021 and had also integrated the new portal for registration of MSMEs — Udyam Registration with TReDS and government e-commerce platform GeM for seamless transactions.

Union Budget 2021-22 Expectations for MSMEs: With the post-pandemic budget just around the corner gaining significance to understand the measures to be rolled out towards accelerating full recovery of key sectors such as MSME, businesses are expecting further relief to their working capital crisis. MSMEs, which were allocated Rs 3.7 lakh crore of the Atmanirbhar package last year by the government, are seeking an extra boost to the credit side of their requirements to get back in the pre-Covid shape as soon as possible.

“The budget should extend the credit guarantee scheme available for MSMEs at least for the next 12 months. That will help them to get access to credit from NBFCs without much difficulty. There should be a stipulated target for the scheme geography-wise, sector-wise, and rating wise,” Umesh Mohanan, Executive Director & CEO, Indel Money told Financial Express Online. The government had already extended the Emergency Credit Line Guarantee Scheme (ECLGS) twice from the scheduled timeline till October 2020 to November and further till March 31, 2021, with the launch of ECLGS 2.0 tweaking the criteria around eligibility, turnover limit, moratorium, and repayment window to pique interest among potential borrowers. The government had also expanded the scope of the scheme to extend coverage beyond MSMEs and Mudra loan borrowers to individual loans for business purposes.

Interest subvention scheme, which offers interest relief to MSMEs of 2 per cent per annum on their outstanding fresh or incremental term loan and working capital loans, is another critical area where small businesses would be happy to see an extension. The scheme was extended till March 31, 2021, however, its coverage is limited to the loans to the extent of Rs 1 crore. “We would like to propose that the scheme to extended further with enhanced coverage. We request the government to consider a 3 – 4 per cent interest subvention to the extent of Rs 300 lakh (Rs 3 crore). Since a key agenda of interest subvention scheme for MSME is to get them on-board the GST horizon, the relaxation will attract more MSMEs on board,” said Vikash Agarwal, President, Indian Chamber of Commerce.

To help MSMEs with their working capital requirement, the government has been urging small businesses with zero onboarding fee to register on the TReDS platforms including Invoicemart, m1xchange, and RXIL. However, TReDS platforms seek “amendments to Factoring Act to be passed and NBFCs other than NBFC factors to be allowed as financiers on TReDS. This would open up TReDS for a vast number of MSMEs,” said Ketan Gaikwad, CEO and MD, RXIL.  The government had waived the onboarding fee of Rs 10,000 on TReDS platforms in September last year till March 2021 and had also integrated the new portal for registration of MSMEs — Udyam Registration with TReDS and government e-commerce platform GeM for seamless transactions.

 

Read more at:

https://www.financialexpress.com/budget/budget-2021-expectations-msmes-seek-extension-of-credit-guarantee-scheme-interest-subvention-coverage/2173309/

09-Jan-2021 RBI weighs trade credit insurance for financiers on TReDS

 

The Reserve Bank of India is weighing the possibility of allowing financiers on the Trade Receivables Discounting System (TReDS) to take trade credit insurance (TCI).

This insurance cover can protect financiers-- Banks, Non-Banking Finance Companies- Factors, and other financial institutions -- on TReDS platform against the risk of default when they finance/discount trade receivables of Micro, Small and Medium Enterprises (MSMEs).

TCI, if allowed, can help financiers on TReDs to minimise bad debts and reduce provisions, thereby supporting their bottomline.

The current regulations do not allow financiers to take TCI as the expectation is that their financing activity should be solely based on their credit appraisal and not on insurance.

TCI is currently offered by general insurers to suppliers of goods and services against delay in payment or non-payment of trade credit.

TReDS is an electronic platform for facilitating the financing/discounting of trade receivables of MSMEs drawn against buyers (large corporates, public sector undertaking companies, and government departments) are financed by multiple financiers through a competitive auction process.

Three entities -- Receivables Exchange of India Ltd., A.TReDS, and Mynd Solutions -- have been operating TReDS for more than three years.

A senior public sector bank official said Banks’ have requested RBI to allow them TCI cover on TReDS platform initially in view of the rising stress in the MSME segment.

Moreover, this can buoy MSME financing activity, which is one of the priority areas for the Government as part of its Atmanirbhar Bharat Abhiyan (Self-Reliant India campaign), on the platform.

If the central bank allows TCI coverage to financiers on TReDS platform initially and it proves successful, this could be extended to other financing activities at a later stage, the Banker quoted opined.

According to RBI’s Report on Trend and Progress of Banking in India 2019-20, the number of MSMEs customers availing Covid-19 related moratorium increased to 78 per cent in August 2020, reflecting the stress in the sector.

As per RBI data on “Progress in MSME Financing through TReDS”, in FY2020, the number of invoices uploaded on TReDS platforms jumped 111 per cent year-on-year (yoy) to 5,30,077, with the amount involved rising 95 per cent yoy to ?13,088.27 crore.

The number of invoices financed in the reporting year rose 106 per cent yoy to 4,77,969, with the amount involved rising 91 per cent yoy to ?11,165.86 crore.

 

Read more at :

RBI weighs trade credit insurance for financiers on TReDS - The Hindu BusinessLine

 

 

 

19-Dec-2020 TReDS will support more MSMEs, corporates

 

How does the TReDS platform function?

TReDS brings together suppliers, corporate buyers and financiers. The platform allows either sellers or buyers to initiate the transaction and upload invoices. Invoices move to the bidding que, post-approval from the interest-bearing party. Once the lowest bid is accepted, the seller receives funds against the invoices factoredwithin 48 hours of acceptance.

The buyer's account is debited on the repayment date and the financier's account is credited. The whole process is automated here with the help of the National Automated Clearing House (NACH) mandates
 

What has been the impact of Covid-19 on RXIL?

One of the major reasons for the introduction of TReDS was to ensure timely payments to MSMEs, allowing them to access credit at an interest rate which would be offered to their buyers. The other reason for bringing TReDS was formalisation, to provide MSMEs an alternate source of creating credit history.

If you see the journey since the lockdown period, the transactions on RXIL's platform had seen a dip to Rs 60 crore but started picking up from June. It has surpassed the pre-Covid levels and has consistently crossed Rs 500 crore in the last three months. This month, we have reached about Rs 600 crores. There has been a month-on-month growth of Rs 100 crore in the throughput since the lockdown.

RXIL has settled trade receivables worth Rs 3,000 crore so far this financial year and aims at closing in on Rs 6,000 crore.The lockdown resulted in RXIL seeing a tremendous increase in the number of MSMEs requesting to be onboarded to the TReDS platform. On an average, we have received about 2,000 requests every month since the lockdown began. Considering that we have digitised the onboarding process, it is now easier for MSMEs to avail the benefits of TReDS if their corporate buyers are registered on the platform.
 

What are the key factors that have contributed to this jump in transactions?

"There are multiple factors to consider here, but the three main factors are -- The change in the mindset of CPSEs and corporate buyers towards TReDS. We have observed that corporates who had previously registered on the platform as a formality have started transacting since the lockdown began. Corporates that were earlier shying away from the platform have now realised the importance of supporting the MSME ecosystem.

It is only when the ecosystem is supported, with the marginalised participant taken care of, only then the overall economic growth can be ensured. Second, the registrations by MSMEs and corporates have jumped in the last two quarters as the registration fee was waived off under SIDBI's Swavalamban Crisis Response Fund (SCRF). Thirdly, complete transparency is one of the key factors for the platform's success. The government has complete information access - total invoices uploaded for consideration, invoices accepted and invoices due for clearance."

What could improve further for TReDS to reach its total financing potential?

Between the three companies, we have a combined potential of 1 lakh crore. More companies, particularly PSUs and CPSEs, need to start transacting on the platform. The MSME Ministry is playing an active role to support TReDS by asking them to onboard the platform. Collectively, while 160 PSUs would have registered between the three TReDS platforms, only 15-odd PSUs are transacting on the platform.

PSUs and large corporates utilising the platform have immensely benefited in terms of savings in the form of cost of funds, which can go as low as 4.9 per cent per annum, as opposed to paying 12-13 per centa year, through traditional debt-funding instruments like OD.

How MSMEs have benefitted through the TReDS platform?

TReDS has so far processed over 24,000 crore worth of invoices that have helped over 14,000 MSMEs with better liquidity and access to funds on favorable terms since 2017. RXIL alone fulfilled over 237,620 invoices amounting to Rs 6165 crore. This is a step towards bringing the dream of Atmanirbhar MSMEs into reality by giving them the liquidity from their own invoices.

Considering that we have digitised the onboarding process, it is now easier for MSMEs to avail the benefits of TReDS if their corporate buyers are registered on the platform. TReDS as a solution has never been more appropriate to not just help MSMEs mitigate and tide over these uncertain times but also enable large corporates to honour their payments to MSME suppliers.

RXIL's target is to onboard 6,000 to 7,000 MSMEs, out of which 3,500 have already registered so far.We urge MSMEs and corporates to register with TReDS and avail the benefits of quick and easy financing. TReDS offers a win-win proposition to large corporate buyers and their MSME sellers. The MSMEs get their dues paid on time while the corporates can enjoy an extended credit period. While 14,000 MSMEs have benefitted so far, there is still a huge scope for TReDS to reach out to many more such enterprises across the length and breadth of the country.

 

Read more at:

https://www.thehansindia.com/business/treds-will-support-more-msmes-corporates-662688

17-Dec-2020 There's still huge scope for TReDS to reach out to more MSMEs, corporates

 

Trade Receivables and Discounting System (TReDS), an electronic platform for facilitating the financing and discounting of trade receivables of MSMEs through multiple financiers, has proven its worth during Covid-19 by facilitating capital infusion for MSMEs through clearing invoices within 48 hours without any recourse. "Receivables Exchange of India (RXIL) is India's first TReDS platform, backed by leading institutions of the country counting NSE, SIDBI SBI, ICICI Bank and YES Bank as its shareholders. It aims at settling trade receivables worth Rs 6,000 crore for this financial year," Ketan Gaikwad, RXIL's Managing Director and Chief Executive Officer, tells Bizz Buzz in an exclusive interview

How does the TReDS platform function?

TReDS brings together suppliers, corporate buyers and financiers. The platform allows either sellers or buyers to initiate the transaction and upload invoices. Invoices move to the bidding que, post-approval from the interest-bearing party. Once the lowest bid is accepted, the seller receives funds against the invoices factored within 48 hours of acceptance. The buyer's account is debited on the repayment date and the financier's account is credited. The whole process is automated here with the help of the National Automated Clearing House (NACH) mandates.

What has been the impact of Covid-19 on RXIL?

One of the major reasons for the introduction of TReDS was to ensure timely payments to MSMEs, allowing them to access credit at an interest rate which would be offered to their buyers. The other reason for bringing TReDS was formalisation, to provide MSMEs an alternate source of creating credit history. If you see the journey since the lockdown period, the transactions on RXIL's platform had seen a dip to Rs 60 crore but started picking up from June. It has surpassed the pre-Covid levels and has consistently crossed Rs 500 crore in the last three months. This month, we have reached about Rs 600 crores. There has been a month-on-month growth of Rs 100 crore in the throughput since the lockdown. RXIL has settled trade receivables worth Rs 3,000 crore so far this financial year and aims at closing in on Rs 6,000 crore. The lockdown resulted in RXIL seeing a tremendous increase in the number of MSMEs requesting to be onboarded to the TReDS platform. On an average, we have received about 2,000 requests every month since the lockdown began. Considering that we have digitised the onboarding process, it is now easier for MSMEs to avail the benefits of TReDS if their corporate buyers are registered on the platform.

What are the key factors that have contributed to this jump in transactions?

"There are multiple factors to consider here, but the three main factors are -- The change in the mindset of CPSEs and corporate buyers towards TReDS. We have observed that corporates who had previously registered on the platform as a formality have started transacting since the lockdown began. Corporates that were earlier shying away from the platform have now realised the importance of supporting the MSME ecosystem. It is only when the ecosystem is supported, with the marginalised participant taken care of, only then the overall economic growth can be ensured. Second, the registrations by MSMEs and corporates have jumped in the last two quarters as the registration fee was waived off under SIDBI's Swavalamban Crisis Response Fund (SCRF). Thirdly, complete transparency is one of the key factors for the platform's success. The government has complete information access - total invoices uploaded for consideration, invoices accepted and invoices due for clearance."

What could improve further for TReDS to reach its total financing potential?

Between the three companies, we have a combined potential of 1 lakh crore. More companies, particularly PSUs and CPSEs, need to start transacting on the platform. The MSME Ministry is playing an active role to support TReDS by asking them to onboard the platform. Collectively, while 160 PSUs would have registered between the three TReDS platforms, only 15-odd PSUs are transacting on the platform. PSUs and large corporates utilising the platform have immensely benefited in terms of savings in the form of cost of funds, which can go as low as 4.9 per cent per annum, as opposed to paying 12-13 per cent a year, through traditional debt-funding instruments like OD.

How MSMEs have benefitted through the TReDS platform?

TReDS has so far processed over 24,000 crore worth of invoices that have helped over 14,000 MSMEs with better liquidity and access to funds on favorable terms since 2017. RXIL alone fulfilled over 237,620 invoices amounting to Rs 6165 crore. This is a step towards bringing the dream of Atmanirbhar MSMEs into reality by giving them the liquidity from their own invoices. Considering that we have digitised the onboarding process, it is now easier for MSMEs to avail the benefits of TReDS if their corporate buyers are registered on the platform. TReDS as a solution has never been more appropriate to not just help MSMEs mitigate and tide over these uncertain times but also enable large corporates to honour their payments to MSME suppliers.

RXIL's target is to onboard 6,000 to 7,000 MSMEs, out of which 3,500 have already registered so far. We urge MSMEs and corporates to register with TReDS and avail the benefits of quick and easy financing. TReDS offers a win-win proposition to large corporate buyers and their MSME sellers. The MSMEs get their dues paid on time while the corporates can enjoy an extended credit period. While 14,000 MSMEs have benefitted so far, there is still a huge scope for TReDS to reach out to many more such enterprises across the length and breadth of the country.

Any developments in the pipeline that with further aid financing through the platform?

RXIL is currently testing trade credit insurance in a sandbox environment with Tata AIG Insurance. Once approved by the regulator, it will benefit corporates with lower rating to get finance and the financiers to get a risk cover against such invoice discounting.

 

Read more at:

https://www.bizzbuzz.news/bizz-talk/theres-still-huge-scope-for-treds-to-reach-out-to-more-msmes-corporates-750379

30-Nov-2020 First ever TCI-backed transaction on TReDS platform

 

Receivables Exchange of India recently executed a Trade Credit Insurance (TCI) backed transaction with Tata AIG as the insurer and ICICI Bank and YES Bank as the financiers in a sandbox environment. This is the first time a TReDS platform has tested the efficacy of TCI-backed transactions improving the ability of financiers in assigning credit limits to corporates. TCI, once implemented post regulatory approvals, will enable financiers to discount the invoices drawn on lower-rated corporate buyers, by their MSME sellers and will improve the liquidity from lenders. The adoption of TCI on TReDS will pave the way for a completely digital bite-sized credit insurance model. Buying credit insurance on TReDS will be as simple as buying travel insurance while buying an air ticket on a ravel portal, devoid of the lengthy paperwork generally associated with trade insurance. Ketan Gaikwad, MD & CEO of Receivables Exchange of India, said TCI will help financiers in mitigating the risk of non-payment and insolvency/defaults of the buyers. This is expected to increase the current throughput of the platform and put India ahead in league with other developed markets the way this product has been designed, he added.

Trade Credit Insurance is a structural reform that has been re-introduced in India after a gap of 10 years. Globally, factoring and insurance go hand in hand, but in India, both are being seen with a renewed interest as the economy is gradually moving towards formalisation of small businesses.

 

Read more at:

https://bankingfrontiers.com/first-ever-tci-backed-transaction-on-treds-platform/?utm_source=newsletter&utm_medium=sendy&utm_campaign=1st%20Dec%202020

23-Nov-2020 RXIL and Tata AIG initiate The 1st Trade Credit Insurance Transaction in Sandbox Environment on the TReDS Platform

 

Receivables Exchange of India Ltd. (RXIL) recently initiated a Trade Credit Insurance (TCI) backed transaction with Tata AIG as the insurer and ICICI Bank, YES Bank as the financiers in Sandbox environment. This is the first time a TReDS platform has tested the efficacy of TCI backed transaction improving the ability of financiers in assigning credit limits to corporates. TCI, once implemented post regulatory approvals, will enable financiers to discount the invoices drawn on lower rated corporate buyers, by their MSME sellers and will improve the liquidity from lenders.

The adoption of Trade Credit Insurance on TReDS will pave the way for a completely digital bite-sized credit insurance model. Buying credit insurance on TReDS will be as simple as buying travel insurance while buying an air ticket on a travel portal, devoid of the lengthy paperwork generally associated with trade insurance.

Ketan Gaikwad, MD & CEO of Receivables Exchange of India Pvt. Ltd commented, “There has been a need for Trade Credit Insurance (TCI) on TReDS, we are glad that the regulators provided us with a roadmap in a time-bound manner. TCI will help financiers in mitigating the risk of non-payment and insolvency/defaults of the buyers. We collaborated with TATA AIG as the insurer, ICICI and YES Bank as financiers to execute the transaction. This is expected to increase the current throughput of the platform and put our country ahead in league with other developed markets the way this product has been designed"

Trade Credit Insurance is a structural reform that has been re-introduced in India after a gap of 10 years. Globally, factoring and insurance go hand in hand, however, in India, both are being seen with a renewed interest as the economy is gradually moving towards formalisation of small businesses. TCI on TReDS was one of the recommendations by U.K Sinha Committee report on MSME credit. The working group constituted by IRDAI reviewed the guidelines on TCI, which has paved the way for testing in Sandbox environment.

Ajay Gupta, Head Transaction Banking and SMEG, ICICI Bank said, “We are delighted to partner with RXIL for the Trade Credit Insurance (TCI) and successfully piloting the test transaction under IRDA’s regulatory sandbox proposal of TATA AIG. We are sure that TCI will significantly increase the ability of the buyers to get financiers to discount the invoices raised by their MSME suppliers, thereby benefitting a much larger universe of MSMEs. We believe TCI will gather further momentum when it gets approved as Credit Risk Mitigation Technique for lending."

Ajay Rajan, Global Head - Transaction Banking Group, YES BANK said, “With this successful pilot of the Trade Credit Insurance (TCI) backed structure in the Sandbox environment, YES BANK in partnership with RXIL has taken yet another significant step in its efforts towards digitizing and bringing efficacy in the financial supply chain arrangement between Corporate Buyers and their MSME sellers. TCI being a globally accepted Trade Financing & Credit Enhancement structure could potentially help in augmenting and expanding the scope of supply chain financing, thereby supporting the ‘Atmanirbhar Bharat' initiative of the Government.

Risk management and mitigation is an important component of a well-oiled supply chain that drives the economic engine. A simplified trade credit insurance regime that includes MSMEs will encourage more liquidity from lenders and improve the industry’s resilience allowing them to expand faster.

About Receivables Exchange of India:

Receivables Exchange of India is an RBI accredited TReDS (Trade Receivables Discounting System) Exchange Platform that started as a joint venture between Small Industries Development Bank of India (SIDBI) and National Stock Exchange of India Limited (NSE) with State Bank, ICICI and Yes Bank as other stakeholders.


RXIL empowers small businesses to realize their growth potential by accelerating their collections. With its innovative digital platform, MSMEs today can auction their trade receivables on a non-recourse basis at competitive rates, through online bidding by financiers, and gain access to capital in less than 48 hours. This helps MSMEs ease liquidity problems and puts a healthy cash flow back into their working cycles for smoother runs in their businesses. RXIL has over 4,800 MSMEs, 550 buyers and 39 financiers on the platform.

 

Read more at:

https://www.indianweb2.com/2020/11/rxil-and-tata-aig-initiate-1st-trade.html

 

22-Nov-2020 SIDBI pays 24,000 crore rupees to over 14,000 small scale industries

 

SIDBI is an institutional system established by the Reserve Bank of India that facilitates trade receivables financing for small scale industries through multiple lenders. The corporate has been requested to ensure that all companies join the platform of SIDBI.

Ranchi, Jas. A webinar was organized in Ranchi by SIDBI and Jharkhand Small Industries Organization on issues including business conditions. During this webinar, Manivek Mandal, spokesperson of Receivables Exchange of India Limited, AVPA Business Development (East) discussed the importance of SIDBI to solve the problem of payment delays and stabilize cash flow for small scale industries.

SIDBI is an institutional system established by the Reserve Bank of India that facilitates trade receivables financing for small scale industries through multiple lenders. In this webinar, it was informed by SIDBI that SIDBI has provided Rs 24,000 crore for timely payment to more than 14,000 small scale industries in the country. In such a situation, the main objective of our webinar is to enrich the business by educating the participants about the functioning and benefits of SIDBI.

On October 19 this year, the Ministry of Small Scale Industries has issued a statement. Under this, instructions were given to the corporate world for timely payment. The corporate was requested to ensure that all companies join the platform of SIDBI and pay small scale industries through it. On the other hand, according to the notification issued by the Ministry of Small Scale Industries in November 2018, it is mandatory for all government and non-government private institutions, whose turnover is more than Rs 500 crore, to register on the platform of SIDBI.

This will ensure liquidity liquidity for the small scale industries associated with them. In the webinar Mainak Mandal, AVPA Business Development (East) told the participants and small scale industries of the webinar that we request small scale industries and corporates to register with SIDBI and avail quick and easy financing.

 

 

Read more at:

https://www.jagran.com/jharkhand/ranchi-sidbi-paid-24000-crore-rupees-to-14000-small-scale-industries-ranchi-news-21088569.html

20-Nov-2020 RXIL initiates first Trade Credit Insurance transaction with Tata AIG General Insurance Co. Ltd (‘Tata AIG’), ICICI Bank and YES Bank in Sandbox

 

New Delhi: Receivables Exchange of India Ltd. (RXIL) recently initiated a Trade Credit Insurance (TCI) backed transaction with Tata AIG as the insurer and ICICI Bank, YES Bank as the financiers in Sandbox environment. This is the first time a TReDS platform has tested the efficacy of TCI backed transaction improving the ability of financiers in assigning credit limits to corporates. TCI, once implemented post regulatory approvals, will enable financiers to discount the invoices drawn on lower rated corporate buyers, by their MSME sellers and will improve the liquidity from lenders.

The adoption of Trade Credit Insurance on TReDS will pave the way for a completely digital bite-sized credit insurance model. Buying credit insurance on TReDS will be as simple as buying travel insurance while buying an air ticket on a travel portal, devoid of the lengthy paperwork generally associated with trade insurance.

 

Ketan Gaikwad, MD & CEO of Receivables Exchange of India Pvt. Ltd commented, “There has been a need for Trade Credit Insurance (TCI) on TReDS, we are glad that the regulators provided us with a roadmap in a time-bound manner. TCI will help financiers in mitigating the risk of non-payment and insolvency/defaults of the buyers. We collaborated with TATA AIG as the insurer, ICICI and YES Bank as financiers to execute the transaction. This is expected to increase the current throughput of the platform and put our country ahead in league with other developed markets the way this product has been designed”

 

Trade Credit Insurance is a structural reform that has been re-introduced in India after a gap of 10 years. Globally, factoring and insurance go hand in hand, however, in India, both are being seen with a renewed interest as the economy is gradually moving towards formalisation of small businesses. TCI on TReDS was one of the recommendations by U.K Sinha Committee report on MSME credit. The working group constituted by IRDAI reviewed the guidelines on TCI, which has paved the way for testing in Sandbox environment.

 

Ajay Gupta, Head Transaction Banking and SMEG, ICICI Bank said, “We are delighted to partner with RXIL for the Trade Credit Insurance (TCI) and successfully piloting the test transaction under IRDA’s regulatory sandbox proposal of TATA AIG. We are sure that TCI will significantly increase the ability of the buyers to get financiers to discount the invoices raised by their MSME suppliers, thereby benefitting a much larger universe of MSMEs. We believe TCI will gather further momentum when it gets approved as Credit Risk Mitigation Technique for lending.”

 

Ajay Rajan, Global Head – Transaction Banking Group, YES BANK said, “With this successful pilot of the Trade Credit Insurance (TCI) backed structure in the Sandbox environment, YES BANK in partnership with RXIL has taken yet another significant step in its efforts towards digitizing and bringing efficacy in the financial supply chain arrangement between Corporate Buyers and their MSME sellers. TCI being a globally accepted Trade Financing & Credit Enhancement structure could potentially help in augmenting and expanding the scope of supply chain financing, thereby supporting the ‘Atmanirbhar Bharat’ initiative of the Government

 

Risk management and mitigation is an important component of a well-oiled supply chain that drives the economic engine. A simplified trade credit insurance regime that includes MSMEs will encourage more liquidity from lenders and improve the industry’s resilience allowing them to expand faster.

 

Read more at:

https://indiaeducationdiary.in/rxil-initiates-first-trade-credit-insurance-transaction-with-tata-aig-general-insurance-co-ltd-tata-aig-icici-bank-and-yes-bank-in-sandbox/

19-Nov-2020 RXIL, Tata AIG initiate trade credit insurance in sandbox environment

 

 

Receivables Exchange of India Ltd (RXIL) initiated a Trade Credit Insurance (TCI) backed transaction with Tata AIG as the insurer and ICICI Bank and Yes Bank as the financiers in a sandbox environment.

 

 

Read more at:

https://world-news-monitor.com/environment/2020/11/19/rxil-tata-aig-initiate-trade-credit-insurance-in-sandbox-environment/

24-Oct-2020 Working capital for MSMEs is paramount today: Why TReDS is the need of the hour

 

By unlocking the potential of lakhs of crores of trade receivables, TReDS can provide easier access to working capital, thus save India’s vulnerable small businesses, and propel the nation towards self-reliance in the months and years to come. TReDS not only offers MSMEs various benefits but also offers a win-win proposition to all three constituents vis buyers, sellers and financiers.

MSMEs provide employment to over 11 crore Indians and is the second largest employer as a sector after agriculture. Strengthening MSMEs and enabling them to stay afloat during and after this pandemic is the need of the hour.

o start with, MSMEs need help with their most common and historic problem of access to ready and timely cash for payment of various expenses, employees’ salaries, and procurement of raw materials. India’s MSMEs are always constrained when it comes to cash on hand or liquidity of their receivables, as on an average, as per an Economic Times article, 60% of the MSMEs money is blocked into receivables which gets realised much later than the stipulated time of 45 days as per the MSMED Act.

According to a survey done by a leading publication, out of the MSMEs surveyed, only 10% among them got their payments within 45 days and 44% said the payments were unpredictable. The need has been to reduce this unpredictability and ensure a smoother working capital cycle so that MSMEs can carry out their business without disruption and focus their resources on improving the quality of their products and services.

TReDS enables MSMEs to get funds against their receivables within 45 days as per the MSMED Act and unlock the cash stuck in their supply chains.

How does TReDS enable MSME financing?

Trade Receivables Exchange and Discounting System (TReDS) was conceptualized to offer institutional support to MSMEs by discounting their invoices through a transparent online bidding mechanism. The initiative was aimed to institutionalize access to credit and enable formalisation of MSMEs.

TReDS is a completely digital platform connecting MSME sellers, buyers, and financiers. MSMEs registered on TReDS can upload their invoices drawn on their buyers registered with the platform and post-acceptance by their buyers obtain funds within 48 hrs, at an average interest rate as low as 8% per annum. The financing is without recourse to the MSME and sans collateral and is not a borrowing on the MSMEs books.

The journey so far and the challenges faced

Since 2017, TReDS has enabled over 14,000 MSMEs to receive payment worth INR 24,000 crores, allowing them to have better liquidity and access to funds on favourable terms. However, considering the vast number of MSMEs across the country, TReDS registrations need to be carried out on a war footing if India’s MSMEs are to unlock the benefits of trade receivables during the current economic environment.

A major challenge, though, is the fact that the buyers of these MSMEs need to be also registered on the respective TReDS platform and accept the invoices on the platform

Where does TReDS fit in the current economic scenario?

According to the Union Minister of MSMEs, MSMEs collectively are yet to receive over 5 lakh crore in outstanding payments from the central government, state government, PSUs, and the private sector, a sum that amounts to nearly 2.5 % of India’s GDP.

TReDS has the potential to transform this amount into an immense source of liquidity, because MSMEs account for nearly 1/3rd of India’s total economic output, leveraging TReDS to infuse them with liquidity could act as a multiplier, magnifying the impact of the government’s 20-lakh crore stimulus package for the economy on the whole.

Long-term post-COVID opportunities

Bringing MSMEs into the formal finance ecosystem is a challenge due to their unavailable credit history and balance sheet based lending by banking system. Indian MSMEs have long shied away from the formal financial ecosystem due to these challenges as many of them operate as a sole proprietor and prefer remaining informal due to the compliance burden.

Nine out of ten Indian MSMEs depend on credit from informal channels where interest rates charged are as high as 36% per annum. The COVID-19 crisis forces us to address the question of how MSMEs can access formal credit on favourable terms.

Leveraging TReDS has a twofold impact: One, MSMEs would gain access to instant liquidity. Second, by bringing thousands of MSMEs into the formal credit ecosystem through a convenient registration process, TReDS can facilitate a systematic push towards formalizing them.

The pandemic has left us with hard earned lessons and the business which were attuned to the use of digital channels have been able to recover faster than the others. In our experience too, the MSMEs who are part of our platform have been relatively cushioned from the harsh impact of the pandemic and have restored their production. We have seen our throughput cross the pre-COVID levels and continues to see an upward trend.

By unlocking the potential of lakhs of crores of trade receivables, TReDS can provide easier access to working capital, thus save India’s vulnerable small businesses, and propel the nation towards self-reliance in the months and years to come. TReDS not only offers MSMEs various benefits but also offers a win-win proposition to all three constituents vis buyers, sellers and financiers.

 

 

Read more at:

Working capital for MSMEs is paramount today: Why TReDS is the need of the hour | SME Futures

 

 

 

 

 

10-Oct-2020 One District One Product scheme: A step to make India a manufacturing powerhouse

 

Taking lead from Uttar Pradesh government, the central government will soon launch a ‘One District One Product’ programme for every district in the country to expand the outreach of their ‘special’ product not just in India but across the world. Expert review it as a step ahead to make Indian economy strong.

Famous for its tourist destinations and hot springs, Japan’s Oita prefecture was once non-existent on the world’s map. This rural mountainous province was isolated and once was witnessing severe population decline. Its GDP had hit rock bottom in 1970s. However, the entire economy took a giant leap surprisingly with One Village One Product (OVOP) movement.

Beginning in 1979 and ending in 2003, this region’s economic model is a success story adapted by various countries globally. Asian regions such as China, Cambodia, and Indonesia have all been significantly benefitted by the concept. The movement has now been rechristened with different names according to the target group of the movement.

Based on the principles of local yet global, self-reliance and creativity, and maximum utilisation of human-resources, this OVOP movement greatly resonates with the government’s vision of Make in India and Vocal for Local with Global outreach. Akin to the same concept, Government of India has come up with One District One Product (ODOP) scheme.

The scheme aims to boost industrialisation and manufacturing at the district levels to promote the goals of Atmanirbhar Bharat. The union ministry of commerce and industry is working on an institutional mechanism to promote the ODOP scheme. But, the question still stands there! Can our government replicate the success attained by Oita prefecture’s OVOP concept in India?

Advent and Spread of ODOP

Uttar Pradesh government was the first state of India to launch the concept of One District One Product in 2018. The aim was to encourage indigenous and specialised products such as carpets from Bhadohi, perfumes from Kannauj or Kalanamak rice of Siddharthnagar district etc. It also aimed to create product specific traditional industrial hubs across 75 districts of Uttar Pradesh.

The ODOP scheme so-far has helped the state in increasing its exports by about 30 per cent and has also helped it in becoming the third-highest exporter among all states. Furthermore, the export of Bhadohi carpets has doubled from Rs 4,000 crore to Rs 8,000 crore. Industries like handicrafts, food-processing, carpets, garments etc have also earned more foreign exchange.

In addition to this, government has also signed few MoUs with e-commerce organisations such as eBay and Flipkart to promote products. In coming October, the state government is set to organise a five-day international virtual exhibition of ODOP in which around 25,000 stalls will be available for buyers.

Moreover, the state government is all set to promote products selected under ODOP scheme across the country through retail stores. The government will also provide financial assistance to artisans whose products are selected. Products selected under ODOP scheme will be displayed in retail stores across the state. However, display of these products will be confined to stores in airports and railway stations outside Uttar Pradesh.

In the similar vein, the Ministry of Commerce and Industry is now working on an institutional mechanism to promote the ODOP scheme across India. The intent behind this is to make India a manufacturing powerhouse. The scheme will boost existing industrial capacity beyond urban areas by strengthening productive manufacturing of rural or semi-urban areas.

According to the Union minister Piyush Goyal, the future manufacturing clusters may also create low value addition manufacturing cluster in rural India. Calling for its scaling it up as a national movement, he assured that the centre government will provide aid of every possible kind in packaging, branding, and global marketing of such products.

Announcing the initiative, the Department for Promotion of Industry and Internal Trade (DPIIT) has begun conversations at various levels. The Department of Commerce is also engaging actively with state and central government agencies through DGFT to promote the initiative of One District One Product.?

The objective is to convert each district of the country into an export hub by identifying products with export potential in the district. Scheme will then address bottlenecks in exporting these products and support local exporters by scaling up its manufacturing and by finding its potential buyers outside India. This will be done with an aim of promoting exports and manufacturing industry in a particular district. It will also generate employment in the district.??

Is scheme just an aspiration or a concrete plan?

Wherever the concept has been adopted in the world, it has generated positive results. It is now anticipated that the scheme will rejuvenate industries on the basis of clusters in India. The ODOP scheme seems more relevant now if we acknowledge the fact that lockdown imposed due to coronavirus led reverse migration at large.

Talking about the implementation of ODOP across India, Dr. Arun Singh, Global Chief Economist at Dun & Bradstreet adjudges this scheme as a measure to improve competitiveness in markets. He tells, “Though already adopted by UP government as One District One Product in 2018, this initiative would certainly help government to realise its goal of doubling the farmers’ income and strengthening the agriculture value chain.”

He further says, “Not only will it lead to improving competitiveness of unique local area-based products both in national and global markets, it would also enhance the added values of the local product and importantly promulgate optimum use of local resources including labour force. The government’s plan to promote the scheme in other states would bridge the gap between urban and rural areas and prevent interstate rural-urban migration of workforce.”

The ODOP initiative has been now launched by the central government through the cluster-based scheme of Formalisation of Micro-food processing Enterprises (PM FME) in June 2020. Working rapidly with all states, Ministry of Commerce and Industry along with the private sector has identified 24 products. For the manufacturing of these listed products, government will partner with the industry to expand their reach.

Along with this, ministry has directed states to identify products with a market potential for import substitution and export accentuation, and to establish forward and backward market link channels. Joining the bandwagon for growth of manufacturing, Punjab has already released a list of 22 products related to food industry covering all districts. This includes Amritsar for pickle and murabba, Ludhiana for bakery products, Jalandhar and Moga for mangoes and so on.

In another development, states such as Gujarat, Jharkhand,?Madhya Pradesh, Manipur and Telangana have also expressed interest in being a part of the programme. Expressing his views on the scheme, Dr. SP Sharma, Chief Economist and Director of Research at PHDCCI told that the scheme is beneficial for future and all the states should come forward to participate in it.

Dr SP Sharma advises, “States should participate more in such movements for the prosperity of our nation. All Indian states have a potential to help the economy in rebounding. In my opinion, there are loads of opportunities as each state has its own strength and expertise. They have unique products and various specialities to offer in the market.”

In his opinion, states can also collaborate and share skills and good practices. This is further going to enhance the opportunities in various sectors. He opines, “In my view, all the states are specialised in various segments. They could exchange their specialisation and adopt the best practices to move forward. This way they can contribute in the Indian economy.”

He further added, “I think government policies like one district one product is critical for growth of economy and the country. All the states government must implement this reform so that every district in the country has their own identity and a good growth graph.”

Lately the government is focusing more on the MSME sector, while giving a clarion call on manufacturing local products. In the next five years, government is looking to give a Rs 20 lakh crore boost to India’s manufacturing output. Projection is to provide crores of job opportunities and expand economic activity in the country.

Swapna More, State Chairperson Maharashtra – Confederation of Indian Micro, Small and Medium Enterprises (CIMSME) and co-founder at KAGAAY, a realty platform, discusses various facets of the scheme in depth while speaking to SME Futures.

“The scheme has proved to be successful in UP. After its successful experimentation in UP, it is now the time to take it across India for the growth and development of MSMEs. I believe that this scheme will be certainly beneficial for small businesses,” she tells.

According to her, ODOP?is another example of consistent efforts by the Government of India to promote MSMEs. India has a huge rural population with crores of small business owners possessing hereditary local skills but they lack exposure. Hence profit, promotions, and development are confined.?ODOP?is initiated to help local and specialized products and crafts.

“ODOP?will help not only in preserving, developing local skills, and craft but also in promoting it. In the process, it will generate employment for local people too. The scheme also aims at encouraging the use of new technology and training of artisans to survive and grow in a competitive market situation. Business loans are made available at very low-interest rates. Considering all this, scheme will prove to be instrumental in the growth of small businesses,” she asserts.

The government is yet to launch?ODOP?scheme in Maharashtra. However, CIMSME has launched its own cluster-based approach concept derived from ODOP –NISTTHA (National Initiative for Social, Technological and Trades Holistic Advancement) to contribute in this initiative.

Swapna further informs that NISTTHA is a cluster approach to strengthen local economies. Clusters are formed based on geographical location and type of industries both heterogeneously and homogeneously. The concentration of an industry at a particular location may result in significant cost savings to firms in the cluster.

“NISTTHA focuses on the food industry, health care, artisans, service, and real estate. MAHANISTHHA (NISTHHA, Maharashtra) was launched on 22nd Aug 2020 where it announced five clusters. Maharashtra State Council, CIMSME already has established a state team and two district teams, Mumbai and Pune, rapidly expanding to other districts,” she adds.

Cluster approach with reference to Indian economy

Indian government goal is to be a $5 trillion economy by 2025 but the state of Indian economy is dire currently. In such circumstances, government has given a directive for local manufacturing and to become self-reliant. For this, it is imperative for our country to reduce imports and divert trade towards friendly nations while focusing on enhancing indigenous production and domestic capacity building.

Commenting on this, Swapna More tells, “Yes, the Indian Economy has been facing tough times for a few years. Small businesses are worst affected by this Indian market scenario.?ODOP?is actually one of the steps taken by the Indian government to pull the economy out of this slumber.” According to her, it is launched to protect, develop and promote small businesses. It will preserve cultural heritage, market indigenous crafts and reduce dependence on agriculture.

The bleak situation of economy also calls for enhanced competition among states which will then lead to ease of doing business. According to the experts, government is going to rank states under Ease of Doing Business (EoDB) rankings. It is to promote healthy competition among more than 700 districts of the country. It will also ensure that smaller towns and districts become more business-friendly in the coming times.

Dr. DK Aggarwal, president, PHDCCI said that the focus should be put upon One District One Product (ODOP) Scheme that aims to give boost to the traditional industries and enable the people to gain expertise in one product. “The scheme has the potential to contribute towards the growth of states’ GSDP and raise the quality of the products. It will help improve the quality of the product, and transform the product through packaging,” he adds in a statement.

Another aspect of the ODOP scheme is that it will boost the economy with the cluster approach. Started in 1990s cluster based development approach has played a significant role in reviving MSMEs and traditional industries over the years. Since then, cluster development is focussed in many government programmes.

Based on this model, the intent of the ODOP scheme is to develop new industrial clusters in various regions to increase the productivity in order to help these enterprises in competing nationally and globally. The manufacturing by clusters also permits greater focus on public resources.

The targeting of industrial development efforts permits regions to use their limited economic development resources more efficiently. The clusters approach encourages regions to focus on the recruitment, retention, and expansion of small businesses. It also helps them in running development programs rather than just providing assistance.

Talking about necessity of manufacturing in clusters, More opines, “Clustering will encourage networking among firms to help in taking advantage of complementary skills, exploit new markets, integrate activities, or pool resources or knowledge. In this way, cooperation will occur more naturally and frequently within industrial units.”

Another facet of ODOP is enhancing revenue generation. Experts are confident that ODOP initiative will make Indian economy stronger by accelerating industrial revenue. As a finance expert, Ketan Gaikwad, MD & CEO, Receivables Exchange of India Ltd. (RXIL) expresses his view on the scheme.

Commenting on the subject he says, “We are positive about the government’s push towards ‘One District One Product’ (ODOP) as a revenue generation mechanism for MSMEs through structured access to sell the products in the market and obtain funds through formal sources of finance. ODOP?policy has come to light to increase the manufacturing output of MSMEs to Rs.20 trillion in the next five years, adding to the GDP.”

The recent surge in new-age sources of finance like TReDS platform and digital lending has added to the list of viable financing options available to MSMEs. This has led them towards formalization. RXIL alone has accounted for over 1.74 lakh invoices for MSMEs across several industries that have its corporate buyers registered on the platform.

It is proved that district-wise concentrated efforts can yield wonderful results for holistic industrial development. The manufacturing of specialised items produced in a particular district has led to increased profits and employment. Taking lessons from the success of ODOP in Uttar Pradesh, the center has rightly planned to take it across India.

The government will soon launch a ‘One Product One District’ programme for every district in the country to expand the outreach of their special product not just in India but across the world. The entire government machinery can then concentrate on single enterprises to encourage the skilled labour and artisans. This will lead to specialised production and thereafter local businesses can go global by exploring trade opportunities with countries outside India.

 

 

Read more at:

https://smefutures.com/one-district-one-product-scheme-a-step-to-make-india-a-manufacturing-powerhouse/

 

05-Oct-2020 Have a look at 5 FinTechs solving problems of SME’s during Covid

 

 

The COVID19 triggered pandemic has adversely impacted the small and medium businesses and enterprises in India by just adding up to their already existing liquidity crisis. According to certain surveys and reports, over 80 percent of the SME’s have either shut ships or are at the verge of losing business due to unavailability of credit. While the government has taken measures to counter the economic repercussions faced by the segment that is a major contributor to the national GDP, there are certain FinTechs that are trying to solve the liquidity problem by providing faster, cheaper and convenient loans. They are also solving the SMEs other technological problems from taxes to payments.

 

IBS Intelligence has listed five such companies.

RXIL

Receivables Exchange of India Ltd (RXIL) was incorporated on February 25, 2016 as a joint venture between Small Industries Development Bank of India (SIDBI) – the apex financial institution for promotion and financing of MSMEs in India and National Stock Exchange of India Limited (NSE) – premier stock exchange in India. RXIL operates the Trade Receivables Discounting System (TReDS) Platform as per the TReDS guideline issued by Reserve Bank of India (RBI). RXIL is the first entity to receive the approval from RBI on December 01, 2016 to launch India’s First TReDS Exchange. TReDS is an electronic platform for facilitating the financing / discounting of trade receivables of Micro, Small and Medium Enterprises (MSMEs) through multiple financiers. These receivables can be due from corporates and other buyers, including Government Departments and Public Sector Undertakings (PSUs).

Owing to the COVID-induced cash crunch being faced by MSMEs, the TReDS platform recently also waived off its digital onboarding charges. RXIL is the first TReDS to provide online onboarding to MSMEs, overcoming the challenges posed due to the lockdown due to COVID.

 

BIZ ANALYST

Biz Analyst is a mobile application that securely connects to your Tally ERP 9 application and gives you real time access to your Tally data anytime / anywhere. From Sales, purchase, expenses, reports, dashboard to managing your debtors/creditors or understanding your business trends or getting detailed information by Voucher, Ledger, Item etc., the app gives you everything.

LOANS4SME

Loans4SME connects small businesses with lenders to provide cash-flow based loans. With a product suite tailored for high growth companies and a seamless, technology driven approach to lending, we provide a collateral free solution for every financing need your business has. They have built a network of lenders including banks, NBFCs, venture debt firms and family offices. According to their collaterals, they have experts that help SMEs navigate the complex debt financing landscape so businesses get timely capital.

POWER2SME

Power2SME is India’s first buying club for Small & Medium Enterprises, building the bridges between SMEs in the manufacturing industry and raw material suppliers. The company was formed in 2012 with a vision to facilitate smooth business operations for SMEs by sourcing input raw materials at the most competitive price points across multiple products in categories like Metal, polymer, chemicals, yarn and more. Buyers typically gain easy access to a wider marketplace at competitive prices, a diverse assortment of trusted brands to choose from, credit facilities and timely doorstep deliveries.Power2SME caters to over 50,000 SMEs and has over 400 reliable and competitive suppliers.

HYLOBIZ

Hylobiz connects an SME’s business and financial services digitally and seamlessly, without having to undergo any new systems adoption. The Bengaluru based outfit uses a micro-services architecture based neo-banking platform that seamlessly connects with SME legacy tools (accounting, invoicing, ERP) on one end and the multiple banking infrastructure, financial services access, and third-party integrations on the other end. It captures data of receivables and payables, and thus, digitisation acts as a primary offering. Riding on this transactional data for the SMEs, the start-up says it is able to bring in the secondary offerings around insurance and efficient working capital access through partner banks.

 

 

Read more at:

https://ibsintelligence.com/uncategorized/have-a-look-at-5-fintechs-solving-problems-of-smes-during-covid/