Which of the following statements about M1xchange role in Micro, Small and Medium Enterprises (MSMEs) financing is/are correct?
- M1xchange provides collateral-based loans to MSMEs.
- M1xchange facilitates discounting of invoices.
- M1xchange functions as a credit rating agency.
Select the answer using the code given below:
- 1, 2 and 3
- 2 only
- 2 and 3 only
- 1 only
Explanation
Statement 1 is incorrect
- M1xchange does not provide traditional collateral-based loans. Instead, it operates on a completely collateral-free model. The financing is based on the credit profiles of large corporate buyers rather than on the MSME itself.
Statement 2 is correct
- M1xchange is an RBI-approved TReDS (Trade Receivables Discounting System) platform. Its primary function is to facilitate the discounting of invoices and bills of exchange for MSMEs. This allows MSMEs to unlock working capital by selling their approved invoices to financiers (banks or NBFCs) on the platform before the actual due date.
Statement 3 is incorrect
- M1xchange is a TReDS (Trade Receivables Discounting System) platform approved by the Reserve Bank of India to help MSMEs receive early payment against invoices. It acts as a digital marketplace or platform for trade receivables, not a Credit Rating Agency (like CRISIL, ICRA, or CARE). It does not assign credit ratings to companies.
