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:

Option (B) — 2 only

• M1xchange (operated by Mynd Solutions) is India's first TReDS (Trade Receivables Discounting System) platform, approved by the Reserve Bank of India.
• TReDS platforms facilitate the financing of trade receivables of MSMEs through discounting of invoices and bills of exchange. They do not provide direct loans or function as credit rating agencies.
• M1xchange enables MSMEs to get their receivables financed without the need for collateral, as the financing is based on the creditworthiness of the buyer (large corporates or government entities).

• 1. M1xchange provides collateral based loans to MSMEs: Incorrect. M1xchange is a TReDS platform that facilitates invoice discounting, not collateral-based lending. The financing is based on trade receivables, not collateral.
• 2. M1xchange facilitates discounting of invoices and Bills of Exchange for MSMEs: Correct. This is the core function of TReDS platforms like M1xchange.
• 3. M1xchange functions as a credit rating agency for MSMEs: Incorrect. M1xchange is a trade receivables discounting platform, not a credit rating agency. Credit rating is done by agencies like CRISIL, ICRA, etc.