Page 24 - Banking Finance February 2022

ARTICLE

between 60 to 120 days and rest below 60 days. But report Parties involved in this system:
related to pending amount filed by MSMEs in the
'Samadhaan Portal' is Rs 15,195 Crore only (as on date),
reasons need to be investigated further.

To alleviate the hardship faced by the MSMEs across the
country in getting timely payment of their dues from the
buyers (mainly corporate), RBI in May 2017 had launched
an online bill-discounting platform called Trade Receivable
Discounting System (TReDS) to give routinely cash-strapped
MSMEs a way of raising funds by selling trade receivables
from Corporates.

MSMEs (Seller or Supplier), Corporates including PSUs and
Despite of 3 years of inception of this system, TReDS is still
Govt. department (Buyers) and Banks/ FIs/ NBFCs
struggling to gain popularity and to reach out to all MSMEs (Financer).
across the country. Though silver lining is that due to RBI
and government effort, TReDS in FY2017-18, did a business It brings together the MSME Suppliers, the Buyers (i.e.
of about Rs 800 crore, which further increased to Corporates, Government Departments and Public Sector
approximately Rs 7,000 crore in FY 2018-19 and to Rs Undertakings) and the Financiers (i.e. Banks, NBFCs and
11,200 crores in FY 2019-20.
Financial Institutions) for facilitating uploading, accepting,
discounting, trading and settlement of invoices/bills of
The present article will discuss about the TReDS, its
operation, present scenario, bottlenecks/challenges and exchange of MSME Supplier on T+1/ T+2 days basis.
future ahead.
TReDS platform conducts KYC, sign master agreement and
Onboard all the three parties. All the three parties need to
What is a TReDS? open a designated Bank account for TReDS and provide auto
Trade Receivable Discounting System "TReDS" is an online debit mandate to the settlement bank of TreDS partners
platform being set up under the approval of Reserve Bank (RXIL, Invoicemart & M1Xchange). The Financiers also needs
of India (RBI) to facilitate online discounting of invoices/ to assign limits to the Buyers of the platforms based on
receivables and Bills of Exchange on a PAN India basis. internal risk assessment on the Buyers.

It is a digital platform for MSME Suppliers to auction/ Objective of TReDS
discount their trade receivables at competitive rates
To provide MSMEs hassle free payment / Cash flow at
through online bidding and get instant payment directly to competitive rates through an open bid process through
their account.
multiple financiers.
Providing access to working capital and reduced cost
At present, three companies are registered with the
for MSMEs. This will improve the liquidity in the MSME
Reserve Bank of India for operating as a TReDS
Platform: sector significantly.
Receivables Exchange of India Ltd (RXIL)- www.rxil.com How it works?
- a joint venture of the National Stock Exchange and
SIDBI First of all the parties involved need to register themselves
into the portals of any of the three TReDS partners. All the
A.TReDS Ltd (Known as Invoicemart)- three parties must register with a common partner's viz.
www.invoicemart.com - a joint venture of Axis Bank and RXIL, M1Xchange or Invoicemart. Maximum of the
mjunction services. Financiers have registered themselves in all the three
M1 Xchange - www.m1xchange.com - a MYND exchanges. So, MSME seller can choose the platforms as per
Solution company- based in Gurugram their needs or can register in all the three.

24 | 2022 | FEBRUARY | BANKING FINANCE