Ease of doing business for MSMEs: The Reserve Bank of India (RBI) has slapped a monetary penalty of Rs 13,90,000 on Mynd Solutions Private Limited for not complying with the guidelines on Trade Receivables Discounting System (TReDS) updated as on July 02, 2018, the central bank said in a statement on December 29, 2022. Gurugram-based Mynd Solutions provides business process management services in finance and accounting, human resource outsourcing, IT and consulting. The company is the promoter of the invoice discounting platform for MSMEs M1xchange – one of the operators of RBI’s TReDS platform.
The central bank said it was observed that non-promoter shareholding in the company had exceeded the ceiling of 10 per cent prescribed for TReDS operators. Accordingly, notice was issued to the company advising it to show cause as to why a penalty should not be imposed for non-compliance with the directions, it noted.
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As per the RBI’s guidelines, the financial criteria for setting up of and operating the TReDS involves entities, other than the promoters, are not permitted to have shareholding in excess of 10 per cent of the equity capital of the TReDS.
The bank added that after considering the entity’s responses and oral submissions made during the personal hearing, the charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty. The penalty has been imposed in the exercise of powers vested in RBI under Section 30 of the Payment and Settlement Systems Act, 2007 (PSS Act). However, the RBI noted that the penalty action on the company “is not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers.”
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Meanwhile, the number of invoices uploaded and financed through TReDS had more than doubled in FY22 while its success rate improved to 94.7 per cent from 91.3 per cent a year earlier, said the Report on Trend and Progress of Banking in India for FY22 by RBI recently. The invoice volume had increased to 17.33 lakh involving Rs 44,111.80 crore in FY22 from 8.61 lakh invoices involving Rs 19,669.84 crore uploaded in FY21.
TReDS was introduced by the central bank in 2014 and licensed three platforms – RXIL, Invoicemart, and M1Xchange to operate TReDS. C2FO, a global on-demand working capital platform, was the latest company to get in-principle approval from the RBI in November 2022 to set up and operate TReDS.
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