TAssets is revolutionizing SME finance through blockchain

August 18, 2022August 18, 2022 Editorial Team

In the context of SME finance, the benefits of blockchain may be less apparent than for something like trade finance, which has long been associated with unwieldy paper-based processes. But there has nevertheless been plenty of discussion about how blockchain could play a role in sme finance.

For one thing, the ability of blockchain to create an immutable audit trail for all transactions has the potential to increase trust between the relevant parties. Blockchain could also be used to achieve a single source of truth for activities such as invoice receipt and approval, which are key when it comes to determining which invoices can be paid early. Other benefits could include using smart contracts to automate transactions, or the use of blockchain to enable pre-shipment supply chain finance.

Another point of interest is the role blockchain could play in opening up supply chain finance to more players in the supply chain, such as MSME suppliers. One such solution is built by TAssets , an innovative supply chain fin-tech which has developed “MSME Credits”, a patented solution to enable value chain finance for MSMEs. Traditionally, bank-led supply chain finance programs have focused on the buyer’s largest 30 or 50 suppliers that are directly supplying to them. However, there are many MSME suppliers who are directly and sometimes indirectly (tier-2 or tier-3 vendors) supplying to corporations. It is these suppliers which are most credit starved.

TAssets enables Deep Tier vendors to avail credit at low cost based upon Anchor’s credit-worthiness through their proprietary technology. This solution provides comfort to financial institutions to fund MSMEs at the same ROI (rate of interest) offered to well rated Anchors as their risk is primarily underwritten on the Anchor by moving the invoice tokens in downwards value chain called as MSME credits. No wonder, DIPP GOI has awarded a patent to the start-up for the innovation.

The product creates a win-win situation for all stakeholders in supply chain finance. It provides access to credit at low ROI to Deep Tier MSMEs. For corporates, it enables lower procurement cost, higher vendor stickiness and efficient cash flow management. Financial institutions are able to create a healthy portfolio of msme lenders (meeting their priority sector targets) while taking comfort in the credit worthiness of large anchors.

They believe such solutions should be promoted by government institutes as well as corporates and to empower MSMEs , one of the most important elements for the vision of the USD 5 trillion Indian Economy.

To know more about them at https://tassets.in

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