Govt looking to reduce turnover threshold for corporates to get onboard TReDS: Addl DC MSME Ishita Ganguli Tripathy | The Financial Express

Govt looking to reduce turnover threshold for corporates to get onboard TReDS: Addl DC MSME Ishita Ganguli Tripathy

Credit and finance for MSMEs: “The registration cut-off is Rs 500 crore right now but we have requested the Finance Ministry if it could be brought down to Rs 250 crore turnover because that is the upper limit for MSME,” said Ishita Ganguli Tripathy, Additional Development Commissioner, Office of DC-MSME, Ministry of MSME.

Govt looking to reduce turnover threshold for corporates to get onboard TReDS: Addl DC MSME Ishita Ganguli Tripathy
Speaking at the second edition of the SMEArtha event organised by FEAspire on September 20, Tripathy said the move will get more corporates under the ambit of TReDS.

Credit and finance for MSMEs: The MSME Ministry is looking to reduce the minimum turnover threshold from the current Rs 500 crore to Rs 250 crore for central public sector enterprises (CPSEs) and corporate entities to get onboard invoice discounting platform TReDS in order to expand the latter’s scope. “The registration cut-off is Rs 500 crore right now but we have requested the Finance Ministry if it could be brought down to Rs 250 crore turnover because that is the upper limit for MSME,” said Ishita Ganguli Tripathy, Additional Development Commissioner, Office of DC-MSME, Ministry of MSME. Under the revised MSME definition by the government, enterprises up to Rs 250 crore turnover are categorised as MSMEs.

Speaking at the second edition of the SMEArtha event organised by FEAspire on September 20, Tripathy said the move will get more corporates under the ambit of TReDS. “We request them to not just onboard TReDS but also actively transact as only then can the issue (delayed payments for MSMEs) be resolved,” she added.

Ketan Gaikwad, Managing Director and CEO of RXIL – one of the TReDS platforms licensed by the Reserve Bank of India (RBI) — told FEASPIRE that it would be a much welcome move in order to increase the number of buyers on the TReDs platform and also lead to an increased usage of the platform. However, “the only issue is about the buyers’ credit rating and acceptability for banks to take the risk on them,” and factor the invoices raised by MSMEs against these corporates.

Importantly, a Parliamentary panel studying the impact of Covid-19 on MSMEs in its report presented to the Rajya Sabha in December last year had also recommended that the registration should be made mandatory for all CPSEs having a turnover of more than Rs 250 crores instead of Rs 500 crore as it would enlarge the ambit of TReDS. 

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The Ministry of Corporate Affairs in April last year had identified 4,714 companies with a turnover of more than Rs 500 crore to be onboarded on TReDS. However, “After filtering out companies which are registered on TReDS and which are central government companies, out of these 4,714 companies, so far 1,673 companies have registered themselves on the TReDS portal,” according to an update by the MSME Ministry shared on its MSME Dashboard portal with respect to the status on the number of companies onboarded on TReDS as of September 1, 2022.

Meanwhile, the government in August last year amended the Factoring Regulation Act (Amendment) 2021 to allow Non-Banking Finance Companies (NBFCs) to register on TReDS for discounting MSME invoices. In February this year, RBI also enhanced the National Automated Clearing House (NACH) mandate limit from Rs 1 crore to Rs 3 crore for settlements related to TReDS.

Sundeep Mohindru, the Chief Executive Officer of another TReDS portal M1xchange told FEASPIRE that if NBFCs come on TReDS, they can take a risk call on these corporates with turnover between Rs 250 crore to Rs 500 crore and therefore help MSMEs get funding. “It is important for the liquidity to be there for such corporates. NBFCs can help here.”

Also read: Only 5.8% of women MSMEs got govt help during pandemic: ICRIER report

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