DBS Bank India has announced the launch of a pre-shipment financing solution aimed at empowering SMEs in the country, in partnership with Receivables Exchange of India Ltd (RXIL), the first exchange platform licensed by the Reserve Bank of India under the Electronic Receivables Discounting System (TReDS). The Electronic Receivables Discounting System or TReDS is a digital platform that enables small businesses to access working capital by discounting their receivables. It enables SMEs to discount their invoices online and receive funds quickly from financiers.
While DBS Bank India already offers post-shipment financing on the TReDS platform, its upcoming pre-shipment financing solution will provide SMEs with an additional way to obtain trade finance in a credit-light manner, the lender said in a statement on Monday.
By using RXIL’s alternative commercial lending data to create better borrower profiles, DBS Bank India will be able to support the entire supplier business cycle, from sourcing raw materials to delivering the final product to the customer.
“This offering will be particularly relevant for MSMEs and SMEs across India, enabling them to improve cash flows to fulfil orders even before the goods are delivered to buyers,” the bank said.
Despite their significant participation in trade flows, MSMEs often face challenges in establishing favorable payment and credit terms with buyers, managing exits, and obtaining the documentation required by formal lenders.
DBS Bank India’s new financial solution will enable MSMEs in TReDS to be empowered through a transparent and simplified process to secure financing against purchase orders from buyers, thereby streamlining cash flows, he added.
“The collaboration with RXIL underlines our commitment to supporting the SME sector and expanding their access to finance. The structure enables us to significantly reduce the time taken for credit decision making and related documentation, which will greatly benefit time-strapped entrepreneurs,” said Divyesh Dalal, Managing Director and Head, Global SME Transaction Services and Institutional Responsibility, DBS Bank India.
“DBS Bank India will be the first bank to partner with RXIL to offer end-to-end supplier financing by leveraging the platform’s data for credit assessments and penalty limits,” Dalal added.
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