Axis Bank launches digital invoice discounting platform, seeks govt push

TReDS is factoring of bills, an attempt by the RBI and the government to  allow SMEs to post their receivables on the digital system and get them financed. This will not only give them greater access to finance but also put greater discipline on corporates to pay their dues on time.

“The sale of invoices happen by way of a transparent bidding process involving multiple financiers, which will facilitate efficient price discovery, thus lowering cost of funds for MSMEs. Funds disbursed through TReDS will also qualify for priority sector lending benefits for the banks,” Axis Bank said.

Completing its first set of transactions, Axis Bnk said it discounted the invoices raised on Sobha, West Coast Paper, Intex Technologies, Future Retail and other corporates by their MSME suppliers.

Basu told Moneycontrol, "Factoring is something new that has happened in India. Around 37 percent GDP is contributed by MSMEs but the finance is not available to that proportion. Its success is not in question but when it will happen is something we will have to look at."

He added there is a limit to which collateral can be offered by MSMEs and also their financial statements may not qualify for the bank funding, which is why some players get rejected.

"This platform will provide recourse to the MSMEs, to get the best of the price and there is no marketing cost for companies involved for on-boarding their sellers, who get easy or a recourse for their legitimate receivables and the large corporates get the benefit of getting the MSMEs paid on time and negotiate better from them too," he said.

C Sharma, Vice-Chairman & Managing Director of Sobha, said, "Invoicemart will enable us to improve the financial health of our vendors, which gives us better control over procurement. Additionally, we will use the platform to streamline our vendor payments and for better management of our cash flows."