A day after the government announced that PSUs will have to compulsorily register themselves on the receivables exchange platform for MSMEs, NSE chief Vikram Limaye today said it is an important step which will provide cheap and faster financing to small and medium enterprises.
The Receivables Exchange of India Ltd (RXIL), a joint venture promoted by Small Industries Development Bank of India and the NSE, provides India's first Trade Receivables Discounting System (TReDS) - an online platform for financing of receivables of Micro, Small & Medium Enterprises (MSMEs).
"I think it is a very important initiative that has been announced and is in line with government's priorities as well as in terms of encouraging the SME and MSME sector and so from that standpoint PSUs are very important stakeholders in this and a very large amount of their supply chain sourcing is from SMEs and MSMEs," Limaye, who is NSE's MD and CEO, said here.
Noting that financing required by MSME sector could be upto Rs 20,000 crore, Limaye said, "if a large portion of this is done through receivables exchange then that would certainly be a very important part of getting cheaper and faster financing for MSMEs".
"It is an important initiative as it provides immediate liquidity to MSMEs against their receivable," he added.
TReDS would benefit MSMEs by facilitating them to auction their trade receivables at competitive market rates through transparent bidding process by multiple financiers.
Yesterday, the government had announced compulsory TReDS registration by major PSUs within next 90 days, for shortening the cash cycle.
According to Limaye, the cost of financing receivables is actually much lower for the MSME on this platform than if they had to go and raise financing on their own from the banks.
"The MSME and SME landscape is a very important for India on multiple fronts. It is a core part of the supply chain for larger corporates and are a very important generator of employment," Limaye said adding that these companies have been facing challenges including access to capital.
"The growth of the Receivables Exchange platform itself can be very robust in the long term and this is an initiative to get PSUs to register. Obviously, other private sector corporates, some of them have registered and more will register going forward," he noted.
SBI, ICICI Bank, Yes Bank, SBI Caps, and ICIC Securities are other investors of RXIL.
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