Invoice discounting solution for MSMEs Trade Receivables Discounting System (TReDS) by the Reserve Bank of India has financed 41.6 lakh invoices involving Rs 1.38 lakh crore during the financial year 2023-24. According to the data shared in a written reply to a question in the Lok Sabha by Shobha Karandlaje, Minister of State in the MSME Ministry, the number of invoices financed across four licensed TReDS platforms in FY24 jumped 62 per cent from the previous year while the amount involved was up by 80 per cent.
In FY23, aggregate financing of 25.6 lakh invoices involving Rs 76,638 crore was reported across Receivables Exchange of India Ltd (RXIL), Invoicemart, M1 Xchange and C2FO Factoring Solutions, the data shared on Thursday showed.
Looking at the five-year data till FY24, invoice financing on TReDS has 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.
Importantly, the central bank in a December last year report on the banking sector’s performance during 2022-23 and 2023 noted that the success rate (invoices financed) on TReDS was 94 per cent.
On the other hand, the number of registered MSME sellers jumped by nearly 51 per cent during FY23 and the number of buyers (corporates/other buyers, including government departments/ public sector undertakings) shot up by 35 per cent indicating improving participation on the platform.
The RBI had undertaken the TReDS initiative back in 2014 to enable MSME suppliers to discount their invoices and receive payments before their due date by ensuring the conversion of their bills into liquid funds in a short period.
To boost liquidity for MSMEs on TReDS, Finance Minister Nirmala Sitharaman in this year’s full budget in July had reduced turnover criteria to Rs 250 crore from Rs 500 crore for buyers to get on TReDS.
Sitharaman noted that this would lead to onboarding 22 more central public sector enterprises (CPSEs) and 7,000 more companies on TReDS. Further, the inclusion of medium enterprises (with turnover between Rs 50 crore and Rs 250 crore) in the scope of the suppliers was also announced.