Jana Small Finance Bank partners with all three TReDS platforms

By Leandra Monteiro

Jana Small Finance Bank has taken a significant step in easing the flow of liquidity to its MSME customers by tying up with all the three existing TReDS platforms, namely M1xchange, RXIL, and A.TReDS. The partnership with Jana Small Finance Bank will now provide buyers and suppliers registered on all the TReDS platforms with a variety of options to secure funds by discounting invoices after sale.

The Trade Receivables Discounting System (TReDS) has been set up by RBI, in order to resolve the credit challenges faced by the MSME suppliers by enabling discounting of their invoices and bills of exchange. TReDS ensures timely payments to MSMEs that access credit by posting their trade receivables on the system and getting them financed at a competitive rate through an auction mechanism where multiple financiers can bid on invoices accepted by PSUs/corporate buyers. Consequently, not only does this give MSMEs greater access to liquidity but it also puts greater discipline on corporates to pay their dues on time.

For MSME suppliers, TReDS offers the benefits of easy and quick availability of finance by discounting receivables at competitive rates, minimum and simple documentation, and overall better working capital management. For buyers of the goods or services such as corporates, government departments, PSUs, etc., the platform helps to optimize working capital, reduced procurement cost, improve vendor management and lower administration cost for vendor financing, payments and settlements. It is a single platform for sellers, buyers and financiers, making financing of trade receivables easy with no paper work, online transactions, competitive discount rates, seamless data flow, and standardized practices.

With the economy recovering after the COVID pandemic, Jana Small Finance Bank has been seeking to bolster its goal of building a robust and diverse MSME portfolio by stepping up its focus on supply chain financing. This partnership with all the three TReDS platforms is inclusive and provides access to a broad range of MSME loan-seekers.

Sumit Aggarwal, Head of MSE, Supply Chain & Financial Institutions, Jana Small Finance Bank said, “MSMEs contribute 30% of India’s GDP, their growth depends on the availability of convenient, collateral free funding solutions to finance average outstanding receivables of Rs 500,000 crores per year, due to the time lapse between raising an invoice and receiving payment. By partnering with all available TReDS exchanges, we intend to become the go-to solution provider of supply chain finance to MSMEs that wish to unlock working capital without having to post collaterals or go through lengthy loan application processes.”