BRICS trade ministers to study invoice discounting mechanism for MSME financing

The BRICS trade ministers have agreed to undertake a study for setting up an ‘Invoice Discounting Mechanism’ for member countries to promote innovative financing systems that facilitate easier access to trade finance for Micro, Small, and Medium Enterprises (MSMEs). The consideration is important as globally, the MSME finance gap is estimated around $5.7 trillion and increases to $8 trillion when informal enterprises are included. The challenge primarily stems from the inability of small enterprises to present viable or bankable business plans resulting in stringent lending conditions, higher borrowing costs, increased collateral demands and market access bottlenecks. The ministers expressed commitment…