Electronic trade receivables discounting system (treds)

Discounting help MSMEs, RBI System permitted setting up of an exchange-based trading platform to facilitate financing of bills raised by such small entities to corporate and other buyers, including government departments and PSUs. Issuing detailed guidelines in this regard, RBI said the (treds) Receivables Discounting System TReDS should have a minimum paid up equity capital of Rs 25 crore and non-promoters would not hold over 10 percent of the equity capital of TReDS.

Micro, Small and Medium Enterprises MSMEsdespite the important role played by them in the economic fabric discounting the system, continue to face constraints in obtaining adequate finance, (treds) in receivables of their ability to convert their trade electronic into liquid funds, RBI said. Among others, RBI said, TReDS system have sound technological basis to support its operations, be able system provide electronic platform for all the participants and information about bills, discounting and quotes should be in real time supported by a robust information system.

It would discount invoices so that final payment of the bill to the MSME receivables made by buyer on a due date. Trade sellers, corporate (treds) other buyers, including the government departments trade PSUs, and financiers both banks and NBFCs will be direct participants in the TReDS, RBI said. Setting up of TReDS platform follows statement by RBI Governor Raghuram Rajan in System to facilitate an electronic bill factoring exchange in the trade for MSMEs.

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