Question
GSMediumPrelims 2026Economy

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 :

Explanation

Statement 1 is Incorrect: M1xchange is an RBI-regulated Trade Receivables Discounting System (TReDS) platform. Financing on M1xchange is strictly collateral-free and "without recourse" to the MSME. The transaction is driven by the creditworthiness of the corporate buyer, meaning the MSME does not need to pledge any assets or take on traditional debt to secure the funds.

Statement 2 is Correct: The primary function of M1xchange is facilitating the discounting of invoices and Bills of Exchange. MSMEs upload verified trade receivables to the platform to receive early liquidity via competitive bidding by financiers (Banks and NBFCs).

Statement 3 is Incorrect: M1xchange is a receivables exchange and financing platform, not a credit rating agency. In India, credit rating agencies (such as CRISIL, ICRA, CARE, or SMERA) are distinct entities primarily regulated by SEBI, whereas M1xchange operates under the RBI's payment and settlement systems framework.

Therefore, option B is the correct answer.

More questions fromEconomy

See All Answers

Trusted by 2L aspirants

Practice UPSC Prelims PYQs Smarter

Practice Now
  • Track accuracy & weak areas
  • See past trends & repeated themes
Start Practicing Now

PYQs by Papers

Most repeated Topics from Economy in Last 5 years

Repeated Topics
Questions in Last 5 Years
Finance and Financial Markets27 (34%)
Money, Banking and Monetary Policy16 (20%)
Public Finance in India11 (14%)
Infrastructure and Investment Models in India9 (11%)
Services and Digital Economy9 (11%)

Crack UPSC with your
Personal AI Mentor

An AI-powered ecosystem to learn, practice, and evaluate with discipline

SuperKalam
SuperKalam is your personal mentor for UPSC preparation, guiding you at every step of the exam journey.

Download the App

Get it on Google PlayDownload on the App Store
Follow us

ⓒ Snapstack Technologies Private Limited