MC Exclusive | TReDS platform M1xchange to soon get Tata AIG Insurance, SBI General Life on invoice discounting platform

n the financial year (FY) 2023-24, M1xchange surpassed Rs 1 lakh crore in throughput (business volume) and registered a 100 percent year-on-year (YoY) growth.

Amazon-backed Trade Receivables electronic Discounting System (TReDS) platform M1xchange will soon onboard Tata AIG Insurance and SBI General Life Insurance on its invoice discounting platform, said Sundeep Mohindru, managing director and chief executive officer.

“We are in the works and in conversation with two insurance companies, Tata AIG and SBI General Insurance, on on-boarding them to our platform,” Mohindru told Moneycontrol.

In February 2023, the Reserve Bank of India (RBI) permitted insurance facilities for invoice financing on the platform. “This will encourage financing / discounting of payables of buyers irrespective of their credit ratings. Accordingly, insurance companies will be permitted to participate as a 'fourth participant' on TReDS, apart from the micro, small and medium enterprises (MSME) sellers, buyers and financiers,” the RBI said in a statement.

Also read: Shriram General Insurance plans to go public in two-three years, says MD

The company, Mohindru said, is expecting 35 percent of its transaction volume to come from its GIFT City operations in two years. “In the initial few months, we are expecting around 5 percent of the total transaction volume from our GIFT City operations but in two years, we expect this to be around 30-35 percent,” Mohindru said. M1xchange had last September started testing an international version of TReDs or ITFS in GIFT City to enable Indian MSMEs to avail liquidity at relatively low rates of 4-9 percent against their invoices.

Outlook on total business

In the financial year 2023-24, M1xchange surpassed Rs 1 lakh crore in throughput (business volume) and registered a 100 percent year-on-year (YoY) growth. It discounted invoices of around Rs 43,000 crore in FY24 compared to Rs 23,100 crore in the previous fiscal.

Going forward, Mohindru said that in FY25, the company plans to take the total transaction value to around Rs 70,000 crore. “We are targeting a total of Rs 70,000 crore transaction volume in the financial year 2024-25,” he said.

The company has agreements with multiple state governments, including Andhra Pradesh, Maharashtra, Haryana, Goa, Madhya Pradesh and Tamil Nadu for providing liquidity services to MSMEs and timely payments at a competitive rate.

Mohindru also said that the company may look at supply chain financing in FY25.

The company has more than 60 lenders and around 32,000 MSMEs opting for its invoice discounting services. Other than M1xchange, two other TReDS platforms licensed by RBI are RXIL and Invoicemart.