Reserve Bank of India (RBI) issues Master Directions on Trade Receivables Discounting System (TReDS) to streamline MSME financing

Key facts

• The Reserve Bank of India (RBI) has prescribed a minimum net worth requirement of ₹25 crore for entities seeking authorisation to set up and operate a Trade Receivables Discounting System (TReDS) platform.
• Existing authorised TReDS entities have been granted a timeline until March 31, 2028, to meet the new capital requirements and must maintain this net worth on an ongoing basis.
• The RBI has permitted financiers to avail credit guarantee cover from any credit guarantee fund trust set up by the Government of India (GoI) for exposures undertaken on the platform.
• Insurance companies and government-notified credit guarantee funds are now recognised as participants on TReDS platforms, with the condition that insurance premiums shall not be levied on Micro, Small and Medium Enterprises (MSME) sellers.
• The directions mandate that assignment of receivables from TReDS transactions must be filed with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI).