DBS Bank India rolls out pre-shipment financing solution for MSMEs on TReDS

DBS Bank India has announced the launch of a pre-shipment financing solution aimed at empower SMEs in the country, in partnership with Receivables Exchange of India Ltd (RXIL), the first Reserve Bank of India-licensed exchange platform under the Trade Receivables electronic Discounting System (TReDS). The Trade Receivables electronic Dscounting System or TReDS is a digital platform that enables small businesses to access working capital by discounting their receivables. It enables MSMEs to discount their invoices online and receive funds promptly 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 with an additional way of availing trade finance in a credit-light manner, the lender said in a statement on Monday. 

By using alternative trade lending data from RXIL to build better borrower profiles, DBS Bank India will be able to support the supplier’s entire trade cycle, from sourcing raw materials to delivering the end product to the customer. 

“This offering will be particularly relevant for MSMEs and SMEs across India, enabling them to enhance cash flows to fulfill orders even before goods are delivered to buyers,” the bank said. 

Despite their sizeable share in trade flows, MSMEs often face challenges establishing favourable payment and credit terms with buyers, managing outflows, and obtaining the documentation required by formal lenders. 

DBS Bank India’s new financing solution will enable MSMEs on TReDS to be empowered through a transparent, simplified process to secure funding against purchase orders from buyers, thereby streamlining cash flows, it added. 

“The collaboration with RXIL underscores our commitment to supporting the MSME sector and broadening their access to finance. The structure enables us to significantly reduce the time required for credit decisioning and linked documentation, which will greatly benefit time-strapped business owners,” said Divyesh Dalal, Managing Director and Head-Global Transaction Services-SME & Institutional Liability Business, DBS Bank India.

“DBS Bank India will be the first bank to partner with RXIL to offer end-to-end supplier financing by harnessing platform data to perform credit assessment and sanction limits,” Dalal added.