CIO & LEADER-Issue-01-April 2018 (1)
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Insight<br />
Exchange in March 2<strong>01</strong>4. Based<br />
on feedback from public and<br />
stakeholders, it published the final<br />
guidelines in December that year.<br />
The guidelines outlined the<br />
requirements and the basic tenets<br />
of operating the TReDS, including<br />
the system participants, their roles,<br />
transaction process flow, settlement<br />
process, etc., besides indicating the<br />
eligibility criteria for entities desirous<br />
of setting up and operating such<br />
a system. RBI also clarified, in the<br />
guidelines, that the TReDS will be<br />
an authorised payment system and<br />
will also be subject to the oversight<br />
of the Reserve Bank of India under<br />
the Payment and Settlement Systems<br />
(PSS) Act, 2007.<br />
RBI also specified that MSME<br />
sellers, corporate and other<br />
buyers, including the Government<br />
Departments and PSUs, and<br />
financiers (both banks and NBFC<br />
factors) would be direct participants<br />
Jesse Chenard, CEO, MonetaGo<br />
in the TReDS, which would<br />
provide the platform to bring these<br />
participants together for facilitating<br />
uploading, accepting, discounting,<br />
trading and settlement of the invoices<br />
/ bills of MSMEs.<br />
RBI’s guidelines were forwardlooking<br />
as the regulator explicitly<br />
mentioned that “the bankers of sellers<br />
and buyers may be provided access<br />
to the system, where necessary, for<br />
obtaining information on the portfolio<br />
of discounted invoices / bills of<br />
respective clients.”<br />
It also clarified that the TReDS may<br />
tie up with necessary technology<br />
providers, system integrators and<br />
entities providing dematerialisation<br />
services for providing its services.<br />
The three TreDS platform were<br />
licensed in November 2<strong>01</strong>5. RXIL<br />
was the first to be operational in<br />
January 2<strong>01</strong>7.<br />
KredX, another venture-funded<br />
start-up also into operating an invoice<br />
discounting platform, has also applied<br />
for a licence. KredX has already raised<br />
Series A funding of USD 6.25 million<br />
in October 2<strong>01</strong>6.<br />
Blockchain: Another<br />
Layer of Trust<br />
As the platform providers started<br />
looking out for the latest technology,<br />
blockchain seemed to be tailor made<br />
for the application. Not only it makes<br />
each transaction far more efficient, it<br />
makes it far more trusted too.<br />
What we have seen with this<br />
week’s announcement is almost<br />
unprecedented. Initiated by three<br />
competing new players, without it<br />
being driven by a major financer, is<br />
itself a major step.<br />
“The exchanges realized that there<br />
is significant value in going for a common<br />
blockchain,” says Jesse Chenard,<br />
CEO of MonetaGo, the technology<br />
company that has initiated the platform.<br />
Most important is reducing<br />
fraud and eliminate risks such as<br />
double financing. That will not just<br />
make it far more trusted, but will also<br />
make the system more efficient in the<br />
long run, helping everyone.<br />
“This technology enables us to work<br />
together with the other exchanges to<br />
achieve shared goals without sharing<br />
specific data. I look forward to the day<br />
when other players in the financial<br />
services industry also appreciate<br />
the value add in terms of preventing<br />
frauds related to Bill Discounting and<br />
become a part of this system,” said<br />
Kalyan Basu, MD & CEO of A.TReDs.<br />
“This is a simple and low-cost<br />
technology innovation which helps<br />
us mitigate risks arising from<br />
multiple financing of the same bills<br />
across the platforms in addition<br />
to our existing risk management<br />
processes which provides a clear<br />
benefit. The real benefit will actually<br />
come when other financiers such<br />
as banks, NBFCs, and others<br />
join MonetaGo’s platform,” said<br />
Kashinath Katakdhond, MD &<br />
CEO, RXIL.<br />
Echoed Chenard, “The more the<br />
merrier,” he said referring to more<br />
players joining the blockchain.<br />
The understanding among the<br />
promoters—the three exchanges and<br />
MonetaGo—is that the technology<br />
will be continuously be updated by<br />
MonetaGo.<br />
“We are constantly evaluating new<br />
methodologies and technologies<br />
which we believe will fit into our<br />
long-term product road map” said<br />
Sundeep Mohindru Director and<br />
Founder of M1xhange.<br />
“Tech will change over time. We will<br />
keep supporting that,” said Chenard<br />
of MonetaGo.<br />
The blockchain has been production-active<br />
only for two weeks after<br />
months of testing.<br />
Though this is the first enterprisegrade<br />
live blockchain, there have been<br />
several proofs of concept/trials using<br />
blockchain technology in India.<br />
Most of them have been around two<br />
areas: cross border money remittance<br />
and receivables financing with<br />
invoice discounting<br />
28 <strong>CIO</strong>&<strong>LEADER</strong> | <strong>April</strong> 2<strong>01</strong>8
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