Sunday, October 3, 2021

Four platforms get IFSCA licence for factoring business at Gift City

 These in-principle licences were issued by the IFSCA last Friday to start working through sandbox facilities before formal business


The International Financial Services Centres Authority (IFSCA), the sole regulator of the Gift City-based International Financial Service Centre, has issued licences to four trade-financing platforms to tap the €2,724-billion international factoring business.

The supply chain finance potential in global trade is $17 trillion.

Indian-licensed trade-financing platforms, or TReDS (trade and receivables discounting system) platforms, use blockchain for checking bills submitted for discounting and they may be tested and used for Gift city ventures as well. However, this is not mandatory from the IFSCA point of view but entities coming up at the IFSC are contemplating the use of blockchain.

These in-principle licences were issued by the IFSCA last Friday to start working through sandbox facilities before formal business.

India’s two RBI-licensed TReDS platforms —M1xchange and RXIL —have got the licence. Two others are Kredex and Vayana, which are service providers for bill discounting and related facilities offered by banks. These platforms will enable exporters and importers to avail themselves of trade-finance facilities such as export and import factoring, reverse factoring, supply chain financing, and forfaiting transactions at competitive terms.

According to the McKinsey Global Payments Report 2020, the supply chain finance potential in global trade is $17 trillion. The IFSCA had released a framework for setting up and operating an international trade finance services platform (ITFS) in July. The licensee will have to use the sandbox facility proposed by the regulator, which will help them test programmes before the formal launch. These entities are expected to go live in the first or second quarter of next financial year.

M1xchange is planning a 100 per cent subsidiary for the IFSC business

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