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Shift 8 of 12

Capital moves on as the risk is retired.

FromOne balance sheetToCapital that moves across the network

A brand’s first batch carries the most uncertainty. Once it has sold and been paid for, very little is left. This shift asks whether finance providers could join the network like any other role, entering where they fit and handing the exposure on when the risk has changed.

Level 1 Concept3 min readLooking for a pilot partner
Building block 8 · Transition rulesRisks it touches: all five

One product, four balance sheets

Creation capital funded Meera’s first batch, where the uncertainty was greatest illustrative. Once Arjun had committed and the retailers’ orders were confirmed, a trade-finance provider took on the confirmed orders. That released the creation capital to fund Meera’s next product.

Later, settled receivables from dozens of creators like Meera were pooled into a portfolio that a bank could hold. One product, four balance sheets, each at the stage it was built for.

From holding to handing on

From

One lender, start to finish

To

A sequence of specialised providers

TodayOn an open network
Capital held until repaymentCapital released as the risk changes
Transfer once an asset is standardTransfer as evidence accumulates
Capital that is released can go to the next brand.

How it would work

Transition rules. A candidate capital stack, with rules written into the layer for when an exposure moves from one layer to the next: on what evidence, and in what state.

CAPITAL MOVES ON AS THE RISK IS RETIREDCreation capitalDevelopment and early execution01on what evidence, in what stateInventory and stockist capitalInventory, demand and sell-through02Trade capitalVerified transactions and receivables03Bank and institutional capitalStandardised, diversified exposure04
  1. Network activity
  2. evidence
  3. risk classification
  4. eligibility
  5. risk transfer
  6. a new balance sheet
  7. continued monitoring

Go deeper

What already exists

Exposures already move between balance sheets when standard criteria are met. TReDS lets an MSME’s accepted invoice be discounted by a financier without recourse to the seller[1], and RXIL reports more than ₹3 lakh crore financed since it began[2]. Under co-lending, two regulated lenders share a loan, each keeping at least 10 per cent[3]. And the Reserve Bank’s Directions for banks, dated 28 November 2025, make trade receivables of up to 12 months that a bank has discounted or purchased eligible for securitisation when the drawee has fully repaid its last two receivables within 90 days of the due date, which investors must be able to verify[4].

Scope. These are the rules for banks. We haven’t read the equivalent rules for other lenders, and we haven’t tested whether a pool of receivables from many small brands would meet them.

Rules

Every move of capital is a regulated step. Transfers have to meet eligibility and retention rules: for securitisation of loans of up to 24 months, the originator keeps at least 5 per cent[4]. The lenders involved stay responsible to their customers: under co-lending, the loan agreement names a single point of interface with the customer[3]. Pooled capital from investors, guarantees by non-banks and insurance sit under other rules we haven’t mapped.

Getting it right

Move risk only toward better-informed balance sheets, never away from them.

Let the earlier holder keep a share. A provider who passes on an exposure keeps some skin in the game.

Make handoffs boring. Standard criteria and standard evidence mean that no one has to negotiate every transfer.

Who it helps. Creation capital is released sooner and goes to the next brand. Trade providers and banks take exposures that fit what they hold. Meera gets the right kind of money at each stage, from providers who understand it.

What could go wrong

  • Risk moved to the least-informed holder.If a handoff passes a weak exposure on, trust ends, so each transfer needs evidence and the earlier holder keeps a share.
  • Rules not met.A pool that fails the eligibility conditions can’t be held by a bank, so the pilot is designed against the rules from the start.
  • Capital released but not redeployed.Release matters only if it funds the next brand, so the pilot tracks redeployment.
  • Too many hands.More providers can mean more cost, so each handoff has to pay for itself.

How we’d test it

In one corridor, let a later provider take over the confirmed exposure on a small batch, and release the creation capital behind it.

The test
Release and redeploy
What we would measure
Measure how fast creation capital is released and redeployed, and whether losses at the receiving stage rise. Add the next layer only when the last handoff has worked.
What would end the idea
Creation capital isn’t released and redeployed measurably faster, or losses at the receiving stage rise.

Sources

  1. [1]Reserve Bank of India, Reserve Bank of India (Trade Receivables Discounting System) Directions, 2026 (RBI/DPSS/2026-27/406, 23 June 2026), paragraphs 14 and 20Checked; the Reserve Bank’s text
  2. [2]CXOToday, RXIL TReDS Crosses Landmark ₹3,00,000 Crore Milestone in Cumulative Invoice Financing (10 April 2026)Checked; figures reported by the company in a media release
  3. [3]Reserve Bank of India, Reserve Bank of India (Co-Lending Arrangements) Directions, 2025 (RBI/DOR/2025-26/139, 6 August 2025), paragraphs 10 and 13Checked; the Reserve Bank’s text
  4. [4]Reserve Bank of India, Reserve Bank of India (Commercial Banks – Securitisation Transactions) Directions, 2025 (RBI/DOR/2025-26/160, 28 November 2025), paragraphs 5 and 11Checked; the Reserve Bank’s text

Spotted a source we missed or a rule we misread? Tell us what we got wrong.

When capital changes hands, what carries the participant’s history forward?