Why TReDS?

India's booming economy revolves around Micro, Small, and Medium Enterprises (MSMEs). Their contributions are significant, yet MSMEs’ biggest challenge till date remains to be delayed payments and constrained cash flows. To make these challenges a thing of the past the Reserve Bank of India (RBI) formalised the concept of invoice discounting through Trade Receivables Discounting System (TReDS), an easy-to-use digital platform designed to bring financiers and MSMEs on one platform by streamlining the discounting of trade receivables.

TReDS – Bringing MSMEs and Financiers Closer

TReDS allows MSMEs to auction their trade receivables to multiple financiers, including banks and NBFCs, on a regulated digital platform. It brings timely payments to MSMEs for their supplies, thereby enhancing their liquidity and operational capabilities. On TReDS platform MSME sellers upload their invoices, which are then approved by corporate buyers. Financiers bid on these approved invoices, offering competitive discount rates. MSMEs receive the fund once they accept a bid, and the financier collects the payment from the buyer on the due date.

TReDS – Helping MSMEs Boom

Regulatory Mandates and Compliance

To bring transparency and ensure wider participation, the Indian government has mandated that all companies with a turnover of ₹250 crore and over must register on a TReDS platform by March 31, 2025. This directive is intended to integrate more corporate buyers into the system.

The TReDS Impact

Since its inception, TReDS has positively impacted the financial landscape for MSMEs:

Faster Payment
Cycles for MSMEs

Strengthened Buyer-
Supplier Relationships

Economic
Growth

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