Question
Which of the following statements about M1xchange’s role in MSME financing is/are correct?
1. It provides collateral-based loans to MSMEs.
2. It facilitates discounting of invoices and Bills of Exchange for MSMEs.
3. It functions as a credit rating agency for MSMEs.
Explanation
Statement 1 — Incorrect: M1xchange is an RBI-regulated TReDS platform that enables MSMEs to obtain finance against trade receivables. The financing is generally collateral-free and without recourse to the MSME, with the buyer’s creditworthiness being central to the transaction.
Statement 2 — Correct: M1xchange facilitates the discounting of invoices and Bills of Exchange. MSMEs can upload verified receivables, which financiers such as banks and NBFCs bid to finance, providing early liquidity.
Statement 3 — Incorrect: M1xchange is a receivables financing platform, not a credit rating agency. Credit rating agencies such as CRISIL, ICRA and CARE are separate entities regulated by SEBI.
Therefore, only Statement 2 is correct.