BoM partners with M1Xchange for MSME bill discounting

State-owned Bank of Maharashtra (BoM) Wednesday said it has partnered with M1Xchange TReDS platform for MSME bill discounting.

Trade Receivables Discounting System (TReDS) is a digital platform to support micro, small and medium enterprises (MSMEs) to get their bills financed at a competitive rate through an auction where multiple registered financiers can participate.

In addition to TReDS platform of Receivables Exchange of India Ltd (RXIL) & Invoicemart (A.TREDS Ltd), the bank has now on-boarded as financier on the TReDS platform of M1Xchange of Mynd Solutions, BoM said in a statement on Wednesday.

Mynd Solutions is a technology management firm which runs the TReDS platform of M1Xchange.

The main purpose of TReDS platform is to facilitate smooth flow of liquidity in the system and make finance available at a competitive rate, it said.

As soon as the bills are raised by MSMEs and approved by large corporates on TReDS platform, banks or financiers can bid for them based on the risk rating of large corporates, it said.

MSMEs will receive their dues from the banks or financiers without waiting for the credit period agreed with large corporate, it said, adding that the shortening of payment cycle and the smooth flow of liquidity through the platform will ensure that MSMEs do not lose out on business opportunities due to shortage of funds.

The cost of funds will be reduced for MSMEs as banks will be bidding based on the risk rating of a corporate.