Artfine's Arth Padarth Factoring joins RXIL's TReDS platform

Artfine focuses on providing customized supply chain financing products for corporates to benefit the MSMEs, which are supplying or buying from these corporates. The firm has the distinction of structuring the first dealer securitization in the country. These capital market instruments are rated by credit rating agencies so that they can be subscribed by all investors – HNI and Institutions

Mumbai: Artfine, a specialist supply-chain financing firm which recently secured the NBFC factoring license from RBI through its group company Arth Padarth Factoring and Finance Pvt Ltd, has partnered with Receivables Exchange of India Ltd (RXIL) to onboard on RXIL as a financier. The objective of the partnership is to finance invoice factoring for MSMEs and helping the MSMEs sell their receivables on RXIL's TReDS platform. Artfine also intends to integrate their invoice discounting platform 'ArtfineBilz' with RXIL to offer seamless customer experience, provide new products and increase its reach with the corporates as well as MSMEs.

Artfine focuses on providing customized supply chain financing products for corporates to benefit the MSMEs, which are supplying or buying from these corporates. The firm has the distinction of structuring the first dealer securitization in the country. These capital market instruments are rated by credit rating agencies so that they can be subscribed by all investors – HNI and Institutions.

Founded by ex-bankers Arvind Rangarajan, Saini Rajgopal, and Shantanu Bairagi, Artfine has helped more than 800 SMEs and MSMEs; and has arranged and advised Rs1,000 crores as part of its financing portfolio.

Talking to Bizz Buzz, Shantanu Bairagi, co-founder of Artfine, said: "Access to RXIL platform will help Artfine build asset book through purchase high quality receivables. We intend to integrate our invoice discounting platform 'ArtfineBilz' with RXIL which would enable us to offer better customer experience, provide new products and increase reach."

On how is he planning to support MSMEs, he said that since our inception we have structured financing of about Rs 1000 crores for the benefit of 700 MSMEs. Our NBFC intends to facilitate vendor and dealer financing through a portfolio approach rather than individual financing, thus reaching out to many MSMEs at one go. Our vision of taking supply-chain finance to debt capital markets would broaden the investor base thus opening up more avenues of financing for MSME sector.

Ketan Gaikwad, MD & CEO of Receivables Exchange of India Limited (RXIL), said: "The new guidelines on Factoring Act have provided clarification and widened the scope of companies that can provide factoring business services to MSMEs. We are elated to partner with Artfine and look forward to their valuable support in strengthening the MSME financing on the TReDS platform. The partnership's goal is to help MSMEs finance invoice factoring while also assisting them in selling their receivables on RXIL's TReDS platform. This would not only close the industry's working capital shortfall but also provide MSMEs with low-cost financing in the long run."

The NBFCs have reacted positively to the new Factoring Act guidelines, which provide clarity on the way forward for India's factoring industry. Interested NBFCs are now submitting applications to the RBI for a certificate of registration (COR). The transparent bidding methods on TReDS platforms have further streamlined the timely payment from firms. RBI's revised NACH limit on TReDS now facilitates larger transactions and MSMEs will have to submit fewer invoices with the revised limit of Rs 3 crore as opposed to the earlier limit of 1 crore. Currently, our platform handles an average of 3,000 invoices per day and almost 60,000 invoices per month, of which 15 per cent of invoices are worth more than Rs 1 crore. This will immensely benefit MSMEs as earlier they had to create numerous invoices so that each invoice's value was capped to Rs 1 crore.

Trade Credit Insurance and other pipeline initiatives are further strengthening the way forward for the platform by means of increased transparency, security and ease of use. MSMEs have realised that invoice discounting and the TReDS platform are viable solutions for the cash flow of businesses. In fact, with the spike in business, RXIL aims to touch Rs 13,000 crores throughput in this fiscal, double of Rs 6,500 crore throughput amount achieved in the previous fiscal.

While the government has done a commendable job supporting MSMEs' health throughout the pandemic through various initiatives, there is still a credit gap that has to be addressed for the MSMEs. TReDS has been successfully able to address this as MSMEs get their invoices financed within 24 hours of winning a bid, and that too without any resource. In the last 5 years since inception, RXIL alone has crossed Rs 20,000 crore throughput and got over 10,000 MSMEs on board so far.

Over the years, he said, with the advent of technology backed by several government initiatives, digital supply chain finance has presented itself as a viable solution for ensuring the timely provision of working capital to MSMEs. Leveraging AI, the TReDS platform can successfully conduct critical inspections without the need for additional paperwork, which is time and cost-effective for both parties. More NBFCs coming on board will lead to improved access to factoring, which will further benefit MSME suppliers dealing with corporate purchasers in particular. It is the stated goal of RXIL to have 100,000 MSMEs and reach the target of financing more than Rs 10,000 crore every month by March 2025.