Invoice discounting platform M1xchange has seen a 100% year-on-year growth in business, at Rs 32,000 crore, in the first half of FY24-25. The company says this underscores its role in reshaping alternative financing for micro, small and medium enterprises (MSMEs) and addressing the credit gap.
India’s MSME sector, CRISIL estimates, faces a credit gap of Rs 20–25 lakh crore: Only 20% of the country’s 64 million MSMEs have access to formal credit. To address this gap, the government has introduced several initiatives, including the Trade Receivables Discounting System (TReDS) — an RBI-backed platform enabling MSMEs to manage cash flow by selling trade receivables to banks and financial institutions.
Aligning with these government measures, M1xchange has pioneered the “Small-to-Small (S2S)” financing model, an extension of TReDS aimed at integrating tier-2 and tier-3 MSMEs into the formal credit ecosystem. This initiative enables smaller enterprises to access early payments at competitive rates, fostering financial inclusion and liquidity.
But many MSMEs remain unaware of TReDS and its benefits, while others struggle with onboarding due to complexities in documentation, regulatory compliance and limited digital literacy — especially in rural areas. These deter smaller enterprises from completing the onboarding process.
The need for compliance with various regulatory requirements, including those related to GST and taxation, can also be overwhelming for MSMEs. Firms, especially the micro ones, may struggle with the administrative aspects of uploading invoices and ensuring they meet the criteria. In India, a significant portion of MSMEs still lack the digital skills or infrastructure necessary to navigate online platforms effectively. This digital divide is said to often prevent them from using TReDS.
However, Sundeep Mohindru, Promoter & Director of M1xchange, is optimistic. “In the last two years, awareness has picked up considerably. This is evident from the MSME onboarding on TReDS crossing 100,000. We have seen a greater traction in adoption by private corporations, as this brings down the cost of doing business by 5-7% of the financed amount for private corporations and their MSME suppliers. This ensures early payments for the MSMEs, which help them grow their business. We see MSMEs recognising TReDS as a growth-enabling platform that bridges the credit gap while supporting priority sector lending goals. And all of these help MSMEs with access to credit and at a competitive rate,” he says.
Measures such as reducing the turnover threshold for mandatory TReDS onboarding from Rs 500 crore to Rs 250 crore and increasing priority sector lending (PSL) targets to Rs 27.5 lakh crore for FY25 have made TReDS more attractive to financial institutions.
Record Performance
In FY24, M1xchange facilitated invoice discounting worth Rs 43,000 crore, a sharp rise from Rs 23,100 crore in FY23, driven by increasing adoption among MSMEs, corporates and financial institutions. In the first half of FY24-25 alone, over 200 new corporations and 10,000 MSMEs joined the platform, highlighting its growing acceptance as an efficient and cost-effective financing solution.
In FY24, M1xchange facilitated invoice discounting worth Rs 43,000 crore, a sharp rise from Rs 23,100 crore in FY23, driven by increasing adoption among MSMEs, corporates and financial institutions. In the first half of FY24-25 alone, over 200 new corporations and 10,000 MSMEs joined the platform, highlighting its growing acceptance as an efficient and cost-effective financing solution.
“The platform’s ability to lower financing costs by 5–8% has not only reduced business expenses for MSMEs but also allowed them to pass on these savings to corporate clients. Furthermore, M1xchange’s robust risk-mitigated framework — characterised by minimal defaults — has encouraged banks to extend financing to BBB-rated corporates, expanding credit access for MSMEs,” says Mohindru.
M1xchange’s growth aligns with India’s robust economic performance, particularly in sectors such as infrastructure, electricals/electronics, auto & ancillaries, textiles, energy, and agro, which account for over 60% of the platform’s throughput. Strategic collaborations with state governments have further enhanced liquidity for state-level MSMEs, ensuring timely payments and fostering regional economic development.
By addressing the credit gap and promoting greater access to formal financing, M1xchange states it continues to position itself as a transformative force in India’s MSME ecosystem. “With its innovative solutions, strategic partnerships, and commitment to empowering small businesses, we are driving the future of MSME growth in a dynamic and competitive marketplace,” adds Mohindru.
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