Mumbai: The Reserve Bank of India on Wednesday proposed easing onboarding rules for small businesses on trade receivables discounting system (TReDS) platforms that provide instant working capital to these entities.
These RBI-regulated digital platforms enable micro, small and medium enterprises (MSMEs) to discount their trade receivables (invoices) and get instant working capital from lenders–banks and non-banks, without collateral. Primary TReDS platforms in India are RXIL (Receivables Exchange of India), M1xchange (Mynd Solutions), and Invoicemart.
“In order to promote ease of doing business for MSMEs and to encourage their greater participation on TReDS, it is proposed to dispense with the requirement of due diligence of MSMEs while onboarding on TReDS platforms,” governor Sanjay Malhotra announced as part of the statement on developmental and regulatory policies, released alongside the monetary policy statement.
The central bank had introduced the TReDS framework in 2014, and later strengthened in 2028. Insurance companies were added as the fourth participant in 2023.
“A comprehensive review of other extant instructions has also been undertaken, and draft directions will be issued shortly for public consultation,” RBI said.
While around for several years, the TReDS platform has not seen much of an uptick in transaction volumes due to several challenges, including the lack of digitisation among MSMEs and market fragmentation. The central bank and the government have been taking measures to promote the use of such platforms to enhance credit access to MSMEs.
In the Union budget for FY27, finance minister Nirmala Sitharaman had proposed mandating TReDS as the default transaction settlement platform for all purchases made from MSMEs by central public sector enterprises (CPSEs).
“To leverage its (TreDS) full potential, I propose…to mandate TReDS as the transaction settlement platform for all purchases from MSMEs by CPSEs, serving as a benchmark for other corporates,” Sitharaman had said while presenting the Budget.
The monetary policy committee on Wednesday kept rates unchanged at 5.25% while maintaining a ‘neutral stance’, citing extreme uncertainty due to disruptions in West Asia.
