The value of invoices financed through the invoice discounting platform TReDS (operational since 2017) has surged more than 23 times, said Michael Debabrata Patra, Deputy Governor, Reserve Bank of India (RBI) on Wednesday. Addressing an event on digital technology and economic growth in Jaipur, Debabrata said around 5,000 active fintech companies are involved as of October 2024 in providing various financial and technical solutions to businesses, including MSMEs, helping businesses better manage their operations and improve supply chain finance.
The Deputy Governor noted that TReDS addresses the credit gap of MSMEs estimated at around Rs 52.2 trillion (Rs 52 lakh crore) by connecting them with banks and clients, with a reduction in funding costs up to 2.5 percentage points.
To encourage more buyers (all business and central public sector enterprises) on TReDS and further address the working capital issue faced by MSMEs, the government last week had notified the reduction in turnover criterion for buyers to onboard the platform from Rs 500 crore earlier to Rs 250 crore.
Currently, RXIL, M1xchange, Invoicemart, and C2treds are licensed by the RBI to operate on TReDS platform.
From FY20 to FY24, invoice financing on TReDS jumped 766 per cent from 4.8 lakh invoices financed in FY20, while the amount unlocked for MSMEs through these invoices grew by 1138 per cent from Rs 11,165 crore in FY20, according to the government data.
Debabrata also highlighted the upcoming Unified Lending Interface (ULI) by the RBI on the lines of UPI “which is set to transform the lending landscape in India by making credit more accessible to underserved populations such as small businesses and rural borrowers through reducing documentation requirements and simplifying the loan application process.”
The new platform will “facilitate seamless and consent-based flow of digital information, including even land records of various states, from multiple data service providers to lenders. This cuts down the time taken for credit appraisal, especially for smaller and rural borrowers,” RBI Governor Shaktikanta Das had said in August at an event.