RBI Issues New TReDS Rules to Streamline MSME Participation

The Reserve Bank of India (RBI) has released the Trade Receivables Discounting System Directions, 2026, laying down revised norms for TReDS platforms, as per news reports. The framework is aimed at facilitating MSME participation and enabling financiers to avail credit guarantees for exposures. 

Role of TReDS Platforms 

Trade Receivables Discounting System (TReDS) is an online platform that allows micro, small and medium enterprises (MSMEs) to convert trade receivables into liquid funds. 

Through the platform, sellers can upload invoices or bills for bidding by banks and financial institutions, helping businesses access working capital. 

New Eligibility Requirements 

Under the directions, an applicant seeking authorisation to operate a TReDS platform must have a minimum net worth of ₹25 crore and submit a certificate from its statutory auditor. 

Existing authorised operators have until 31 March 2028 to meet the requirement. The prescribed net worth must also be maintained on an ongoing basis. 

Operational Responsibilities 

The RBI said TReDS platforms should facilitate the uploading, bidding, discounting and settlement of invoices and bills submitted by sellers. 

Platform operators are also required to establish suitable mechanisms to verify the genuineness of uploaded invoices and bills. 

Settlement and Participant Framework 

The directions require platforms to facilitate seamless settlement between financiers and sellers for receivables financing, and between buyers and financiers on the due date using authorised payment systems. 

Under the framework, a seller refers to an MSME, while a financier refers to an entity permitted to undertake factoring business. 

Factoring and MSME Financing 

The RBI noted that MSMEs often face challenges in obtaining adequate finance, particularly when converting trade receivables into cash. 

Factoring enables a bank, registered non-banking financial company (NBFC) or a company registered under the Companies Act to acquire receivables from another entity for an agreed amount, helping improve liquidity access for businesses. 

Read More: RBI Injects ₹1.41 Trillion Into Banking System Through 7-Day VRR Auction to Ease Liquidity Deficit! 

Conclusion 

The directions set out the eligibility conditions, operational requirements and settlement framework for TReDS platforms involved in financing MSME trade receivables.   

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