RXIL to add 8,000 MSMEs under its fold in FY22
Economists predict that the Indian economy will have a healthy revival by the end of the year
image for illustrative purpose
RXIL is expecting to register around 8,000 MSMEs in the current fiscal. Last fiscal, it had registered 5,350 MSMEs. RXIL has posted the largest growth of around 180 per cent for a period of one year from Rs 2,300 crores in FY 2019-20 to Rs 6,500 crores in FY 2020-21.
"This may be attributed to an increase in the number of MSMEs registered on the TReDS platform which rose from approximately 1,155 in FY 2019-20 to approximately 5,350 MSMEs being registered on the platform in FY 2020-21. Companies should be fully established MSMEs satisfying the turnover criteria as well as the investment and plant & machinery criteria. Manufacturing and Service Companies are also allowed to register on the TReDS platform," Ketan Gaikwad, MD & CEO of Receivables Exchange of India Limited (RXIL) told Bizz Buzz.
The credit availability for the MSME segment continues to be a major roadblock for 80 per cent of the total 63.4 million MSMEs in India, a report by the Association of Chartered Certified Accountants. Economists predict that the Indian economy will have a healthy revival by the end of the year as it is predicted to emerge as one of the fastest growing economies in Asia after China.
It is expected to return to pre-covid growth rates, which means a stable and sustainable solution for working capital is more important now than ever. Small businesses have always been at the receiving end as banks still shy away from lending to them. This is only going to get more difficult with reports of drastic dips in NBFC disbursements due to rise in bad loans. In fact, the reported Gross NPAs as of March 2021 were lower than anticipated, mainly due to a rise in loan write-offs.
The problems faced by MSMEs are manifold as Corporates delay payments or dues of the MSMEs. A non-government organization, Global Alliance for Mass Entrepreneurship (GAME), came out with a figure as per a study conducted which showed that Rs 15 lakh crores were the outstanding dues for MSMEs.
There's also a need for the government to take a hard look at the working capital needs of the MSMEs. According to GAME, if all MSMEs delayed payments issues were to be handled, it could cater up to 0.42 per cent of the GDP. If the PSUs and Corporates embrace the TReDS platform, some problems of the MSMEs would be easily solved. Currently, there's a mandate on Corporates with a turnover of Rs 500 crores and PSUs to compulsorily register themselves on the TReDS platform. However, there is a need for them to start discounting transactions on the TReDS platform, he said.
The combined number of transactions taking place monthly on the 3 TReDS platforms, namely RXIL, Invoice mart and M1Xchange are Rs 1,800-2,100 crores. Over the last 3 years, Rs 40,000 crore transactions have taken place on these platforms. However, the platforms have the potential to handle more than over Rs 50,000 crore transactions in a year.
According to Gaikwad, "The need of the hour is to focus on creating awareness regarding the TReDS platform and how it aids MSMEs. Corporates should be induced to start transacting on the TReDS platform." In the future, volumes are projected to rise for MSMEs over the next 16-18 months to over 3,000-4,000 crores per month. The government needs to focus on exploring the TReDS platform for non-MSMEs which buy from MSMEs as well and gaining traction for the platform, he added.
