Trade Receivables Discounting System (TReDS) refers to a system for facilitating financing of trade receivables. It is a technology platform on a digital or electronic network for facilitating factoring of trade receivables through multiple financiers.
The TReDS platform will bring participants together for facilitating uploading, accepting, discounting, and settlement of the invoices/bills of sellers, according to draft directions for ‘Trade Receivables Discounting System’, on which the central bank has invited comments by May 1.
It will also put in place a suitable mechanism to ensure the genuineness of the uploaded invoices/bills, it added.
“The platform shall ensure efficient and seamless settlement of transactions between financier and seller for financing of trade receivables and between buyer and financier on the due date, using any existing payment system,” the draft said.
With a view to facilitating timely access to working capital for MSMEs, guidelines for TReDS were issued in 2014 and subsequently updated in 2018.
The scope of TReDS was further expanded in 2023 with the inclusion of insurance companies as the fourth participant.
The latest exercise is aimed at promoting ease of doing business for MSMEs and to encourage their greater participation on TReDS. PTI