Three factoring exchanges in India launched a blockchain network this week, creating a shared platform to combat fraud in receivables financing. The Reserve Bank of India had licensed RXIL, A.TReDS, a
Three factoring exchanges in India launched a blockchain network this week, creating a shared platform to combat fraud in receivables financing. The Reserve Bank of India had licensed RXIL, A.TReDS, and M1xhange to build the system, which allows the three to exchange information without revealing specific invoices or client details to each other.
The network prevents double financing, where the same receivable gets discounted multiple times across different platforms. By keeping invoice details private while still allowing cross-platform verification, the exchanges can offer lower rates and expand access to capital for businesses that traditional financiers consider too risky.
Kalyan Basu, managing director and CEO at A.TReDS, said his clients worry about data exposure. "Our clients are particularly sensitive about their sourcing inputs, and we absolutely could not broadcast any of their private information to a shared network," Basu said. "This technology however enables us to work together with the other exchanges to achieve shared goals without sharing specific data."
Kashinath Katakdhond, managing director and CEO of RXIL, framed the launch as a risk management tool. He said the solution addressed a core problem in trade receivable discounting. "This is a simple and low cost technology innovation which helps us mitigate risks arising from multiple financing of the same bills across the platforms in addition to our existing risk management processes which provides a clear benefit. The real benefit will actually come when other financiers such as banks, NBFCs, and others join MonetaGo's platform," Katakdhond said.
MonetaGo, a blockchain firm, designed and built the network after months of testing and development. Jesse Chenard, MonetaGo's CEO, called it a major step forward. "This is a significant milestone for blockchain technology and this is only the beginning," Chenard said.
Factoring lets companies convert unpaid invoices into cash upfront, addressing working capital gaps when clients pay late. India's factoring market now distributes $219 billion to micro, small and medium-sized businesses, but $188 billion in demand goes unmet. RXIL, A.TReDS, and M1xhange, which count major Indian and foreign banks as funding sources, discount receivables from corporations, government bodies, and public sector units.
