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TREDX is Bangladesh’s first digital factoring marketplace where the main beneficiary will be millions of SMEs that are suppliers for the corporate sector and in critical need of supply chain finance, said Managing Director and Co-Founder of TREDX M Masrur Reaz in an exclusive interview with The Business Post’s Rafikul Islam
You have recently launched a new Fintech venture TREDX. Pleasetell us about it.
The TREDX, Bangladesh’s first digital factoring platform, started its formal operation on July 31 this year. This ground-breaking initiative marks a new beginning for solving the financial problem of Bangladesh’s Small and Medium Enterprises (SMEs), delivering financing solutions to millions of SMEs.
In order to provide innovative fintech solutions, the TREDX wants to bring together SMEs, banks and financial institutions as well as corporates and their suppliers to facilitate faster, safer, and more competitive access to supply chain finance.
TREDX is the brand name of a digital platform, set up by Think Big Solutions Limited which was incorporated on May 19, 2019, as a limited company in Bangladesh.
We are the first and only company in the country having a license (provided by the Bangladesh Bank on January 18, 2022) to operate a nationwide digital platform for local factoring/receivable finance.
Why did you take the initiative?
The financial sector of Bangladesh has grown significantly in recent decades.
Industrial growth and socio-economic development has accelerated a lot. Despite this success, the financial inclusion gap still persists, especially among the middle segment of enterprises. The contribution of SMEs to the country’s GDP is 25%, but their share of bank and NBFI portfolio is much less.
Although SMEs account for more than 98% of non-farm enterprises in Bangladesh and bank lending to SMEs has tripled between 2010 and 2016, the large majority of Micro, Small and Medium-sized Enterprises (MSMEs) still have limited access to formal finance.
According to the World Bank Group, Bangladesh’s SME sector, which has 804,041 enterprises, suffers from a financing gap of Tk 237 billion (US$2.8 billion) and 60% of the women SMEs financing needs are unmet.
The MSMEs are always struggling for access to credit as they sorely lack collateral, which the lenders require to provide the credit. These MSMEs also have their working capital stuck in invoices payable from larger corporates.
Factoring as a product is best suited to meet the needs of these SME suppliers, wherein the factoring companies and banks could have discounted their approved invoices and provided the suppliers with much-needed liquidity.
We want to bring all stakeholders under the umbrella of a hassle-free payment system and services.
Who will be benefited from TREDX? What are its key features?
The main beneficiary will be millions of SMEs in Bangladesh who work as suppliers to the corporate sector and are in critical need of supply chain finance.
The TREDX will ensure that suppliers of good corporates always get the best discount rates and the corporates will be satisfied that their key suppliers always have access to low-cost funds from all financial institutions.
This platform will also reduce the cost of operations of the financial institutions which ultimately will benefit the suppliers in terms of better rates. The government as one of the largest domestic buyers in the country, hopefully, will also be interested in being a part of this platform so that even suppliers to the government get access to low-cost funds.
Our salient features are — a unified platform for sellers, buyers and financers; competitive discount rates; easy access to funds; completely digital; seamless data flow to all participants; and a single source of truth.
How will TREDX provide financing solutions to the SMEs?
The financing will be done by the banks and NBFIs (non-banking financial institutions) who will be connected to TREDX. The TREDX will connect all parties including sellers, buyers and financers and do the due diligence.
Who are in the governing body of the TREDX? Do you have any branch anywhere?
TREDX’s Chairman is Abul Kasem Khan (former president of Dhaka Chamber of Commerce and Industry-DCCI), Managing Director M Masrur Reaz (former economist at the World Bank Group), and CEO Raja Debnath (IFC’s former senior global advisory for supply chain finance and SME banking).
The TREDX operates under the digital factoring guideline of Bangladesh Bank. The company is run by a team of management professionals. It’s all-digital and online - so it has no branch anywhere.
