Credit and finance for MSMEs: The electronic platform Trade Receivables Discounting System (TReDS) — introduced by the Reserve Bank of India (RBI) in 2014 for MSMEs to finance or discount their invoices — finances around 35,000 factoring units (FUs) per month, informed RBI Governor Shaktikanta Das at the Payment System Operators (PSO) Conference in Kochi on Saturday. “On an average 35,000 FUs worth Rs 7,200 crore are discounted or financed on TReDS every month,” Das said in his speech.
An FU is a standard nomenclature used in TReDS for invoices or bills of exchange containing details related to the sale of goods or services by an MSME seller to the buyer including a corporate, government department or a public sector unit.
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“TReDS platforms have enabled factoring of MSME receivables in a transparent and competitive manner, thereby improving the liquidity position of MSMEs,” said Das highlighting the growth in digital payments infrastructure in the country with the launch of multiple measures including UPI, Payment Aggregators, Money Transfer Service Scheme, and more.
He also noted that the enhancements announced in TReDS so far such as the insurance facility, commencement of secondary market operations and modification in eligibility criteria to participate as a financier will empower the MSMEs to realise their dues faster and in a more cost-effective manner.
Also read: Video: TReDS brought the power of financing to MSMEs instead of banks earlier, says KredX’s Manish Kumar
Meanwhile, the number of invoices financed through TReDS had more than doubled in FY22 while the success rate had also improved to 94.7 per cent from 91.3 per cent a year earlier, according to an RBI report. The number of invoices uploaded on TReDS 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. RXIL, Invoicemart, M1Xchange and C2FO are among the TReDS platforms licensed by RBI. 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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