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Q58 (IAS/2026) Economy › Money, Banking & Inflation Official Key

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:

Result
Your answer: —  ·  Correct: B

Explanation

M1xchange is a Trade Receivables Discounting System (TReDS) platform set up under the regulatory framework of the Reserve Bank of India (RBI) to address the working capital needs of MSMEs.

  • Statement 1 is incorrect: M1xchange does not provide collateral-based loans. TReDS platforms facilitate collateral-free, without-recourse financing by discounting MSME trade receivables based on the credit profile of the corporate buyers.
  • Statement 2 is correct: The primary function of M1xchange is to facilitate the discounting of invoices and Bills of Exchange for MSMEs. It connects MSME sellers, corporate buyers, and financiers (banks/NBFCs) on a single digital platform to ensure quick realization of trade receivables.
  • Statement 3 is incorrect: M1xchange is an invoice discounting platform, not a credit rating agency. Credit rating agencies (like CRISIL, ICRA, CARE) evaluate the creditworthiness of entities, which is distinct from the operations of a TReDS platform.

Therefore, only statement 2 is correct.

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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Which of the following statements about M1xchange's role in Micro, Small & Medium Enterprises (MSMEs) financing is/are correct? 1. M1xch…
At a glance
Origin: Mostly Current Affairs Fairness: Low / Borderline fairness Books / CA: 0/10 · 10/10
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This is a current affairs-driven economy question disguised as a niche corporate trivia question. While 'M1xchange' sounds specific, it is merely one of the RBI-licensed TReDS (Trade Receivables Discounting System) platforms. If you understand the core mechanism of TReDS, the answer reveals itself.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Does M1xchange provide collateral-based loans to MSMEs?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable
Web / Current Affairs
msme.gov.in Primary · Govt
Presence: 5/5
"M1xchange... Key Features... d. No Collateral Required: Discounting is done without collateral, purely on the strength of the buyer's creditworthiness."
Why this source?
  • The source is an official handbook from the Ministry of Micro, Small and Medium Enterprises (MSME), Government of India.
  • It explicitly identifies M1xchange as one of the operational TReDS platforms.
  • It states that on these platforms, discounting is done 'without collateral', based on the buyer's creditworthiness.
www.startupindia.gov.in Primary · Govt
Presence: 4/5
"Trade Receivable Exchanges such as M1xchange, standardizes the process of funding MSMEs via Invoice Discounting. TReDS addresses the gaps in MSME industry as enterprises face challenges in getting their payments on time"
Why this source?
  • The source is from the official Startup India portal (Government of India).
  • It describes M1xchange as a Trade Receivable Exchange that standardizes funding via Invoice Discounting.
  • It contrasts this type of funding with debt financing that 'generally has collateral', implying the invoice-based model is distinct.
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