UPSC Prelims 2026 · Question 58 of 96
UPSC Prelims 2026 question on M1xchange MSME Financing
- ExamUPSC CSE
- Year2026
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicMoney Market
- DifficultyMedium
- TypeStatement
Which of the following statements about M1xchange's role in Micro, Small & Medium Enterprises (MSMEs) financing is/are correct?
1. M1xchange provides collateral based loans to MSMEs.
2. M1xchange facilitates discounting of invoices and Bills of Exchange for MSMEs.
3. M1xchange functions as a credit rating agency for MSMEs.
Select the answer using the code given below:
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Answer: B. 2 only
Verdict
Only statement 2 is correct, so the answer is Option (b).
Analysis
M1xchange, operated by Mynd Solutions, is India's first Trade Receivables Discounting System (TReDS) platform authorized by the Reserve Bank of India. TReDS platforms are designed to support the financing of MSME trade receivables through the discounting of invoices and bills of exchange. They neither provide direct lending services nor operate as credit rating agencies. M1xchange allows MSMEs to obtain financing for their receivables without offering collateral, since funding decisions are based on the credit profile of the buyer, such as large corporates or government organizations.
Statement by statement
Statement 1 is incorrect: M1xchange operates as a TReDS platform facilitating invoice discounting rather than providing collateral-backed loans. The financing is linked to trade receivables instead of pledged assets.
Statement 2 is correct: This represents the primary function of TReDS platforms such as M1xchange, which enable MSMEs to receive early payment against their receivables.
Statement 3 is incorrect: M1xchange serves as a receivables financing platform and does not undertake credit rating activities. Credit assessments are carried out by specialized agencies such as CRISIL and ICRA.