Mynd Solutions, which offers online discounting of trade receivables, expects total throughput of bills discounted through its platform this fiscal to touch ₹3,000 crore, Sundeep Mohindru, Founder & CEO, has said.
This company is among the three that Reserve Bank of India (RBI) has licensed so far for setting up platform for trade receivable discounting under its Trade Receivable Discounting System (TReDS) initiative.
TReDS will allow MSMEs to post their receivables on the electronic platform and get them financed. This will not only give them access to finance but will also put greater discipline on corporates to pay their dues on time.
As an automated system driven platform, TReDS is expected to benefit MSMEs by facilitating them to auction their trade receivables at competitive market rates through transparent bidding process on the platform by multiple financiers. This will help not only quick realisation of receivables but also appropriate price discovery.
Mohindru said that Mynd Solutions’ trade receivable exchange had gone live on April 7 and in two months period discounted bills worth ₹5 crore. Till date, six banks and NBFCs have registered in the platform and five are in the process, he said. The banks already registered include IndusInd Bank, ICICI Bank, Kotak Mahindra Bank and IDFC Bank. The large public sector banks are expected to come on board soon, he said.
About 100 plus MSMEs and 12 large corporates (from sectors such as white goods, agro, IMFL, FMCG, infrastructure) are already on board. Six more large corporates are expected to join soon, said Mohindru. “In next 2-3 months, traction is going to be there. We are also onboarding few corporates with turnover of over ₹5,000 crore. We are looking to on-board 60 corporates, of which about 40 is to follow and expected by September”, he said.
Asked about the revenue stream for the platform, Mohindru said that a fee will be charged on the supplier who is getting the funding. There will be a small charge to the bank also.
A MSME supplying goods and services to a large corporate has a receivable from that large company. He can put the invoice on the exchange. The large corporate will accept the invoice and accept to pay on say the 60th day as per the credit terms. The banks on the exchange will then bid to discount that invoice.
Basis the best bid, MSME will get instant payment on that day itself. As per the credit terms, payment will be made by the corporate to the bank.MSME will get instant payment and the rate of interest he will get is based on the goodwill of the large corporate. In this process, banks are essentially taking a credit risk on the large corporates and not on the MSME.
MSMEs are out of it as he (MSME) is selling his receivable to the bank. There is bidding and so a transparent process. Banks can go after good business.
The other benefit for banks is that they don’t have to source the business, have a relationship manager or a branch as everything is digital.