M1xchange executes testing process

M1xchange, in partnership with YES BANK and RBL Bank, commenced the testing of the ‘Small-Small Factoring’ product under the Reserve Bank of India’s (RBI’s) third cohort of the regulatory sandbox. Post testing, this product is expected to offer an effective solution for over USD 750 Billion in credit gaps for MSMEs in India. This product is one of the eight propositions that have been approved after a detailed evaluation of 22 applications by the RBI.

The key feature is the digital credit assessment engine enabling a 360-degree view of the credit profile of the MSME buyer using a cash flow-based credit model. It analyzes authentic, non-repudiable data from multiple digital sources to generate rich insights around MSMEs credit profiles and hence alleviates traditional concerns around the authenticity of MSMEs’ business financials. This product will leverage capabilities in technology, product development, data and risk analytics to enable cash flow-based credit analytics of MSME buyers instead of the traditional balance sheet-based risk assessment approach.

M1xchange CEO Sundeep Mohindru said, “The cost of funding outside the banking system is very high for MSMEs.With this unique proposition developed by M1xchange TReDS, MSME enterprises will be able to utilise TReDS for receivables discounting from their MSME Buyers”.

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