CPSEs & Companies (w/ turnover > ₹500 cr) to be on-boarded on TReDS

The Trade Receivables Discounting System platform (TReDS) will facilitate the discounting of both invoices as well as bills of exchange. Further, as the underlying entities are the same (MSMEs and corporate buyers) the TReDS could deal with both receivables factoring as well as reverse factoring so that higher transaction volumes come into the system and facilitate in better pricing. The objective of the TReDS is to facilitate financing of invoices / bills of MSMEs drawn on corporate buyers by way of discounting by financiers.

The transactions processed under TReDS will be “without recourse” to the MSMEs.

In exercise of powers conferred by Section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), the Central Government on 2nd November 2018, vide notification S.O. 5621(E) has instructed that

  • All the companies registered with the Companies Act, 2013 (18 of 2013) with a turnover of more than Rs. 500 crore (rupees five hundred crore) and
  • All Central Public Sector Enterprises

shall be required to get themselves on-boarded on the Trade Receivables Discounting System platform, set up as per the notification of the Reserve Bank of India.

The Registrar of Companies in each State shall be the competent authority to monitor the compliance of these instructions by companies under its jurisdiction.

The Department of Public Enterprises, Government of India shall be the competent authority to monitor the compliance of such instructions by Central Public Sector Enterprises.

Copy of notification : S.O. 5621(E)

-Tushar Kaushik

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