Government Mandates TReDS for MSME Invoice Settlement by CPSEs

The Government of India has mandated that all Central Public Sector Enterprises (CPSEs) must settle invoices from Micro, Small, and Medium Enterprises (MSMEs) through the Trade Receivables Discounting System (TReDS), as per the PIB report.  

This initiative aims to expedite payments and provide collateral-free working capital to MSMEs. 

Mandatory Use of TReDS for CPSEs 

Effective from June 30, 2026, all CPSEs are required to route their MSME invoice settlements through TReDS platforms authorised by the Reserve Bank of India (RBI).  

This mandate is part of the Union Budget 2026–27 commitments, aiming to address the issue of delayed payments to MSMEs. 

CPSEs must disclose details of MSME invoices processed through TReDS and obtain a statutory auditor's certificate of compliance during their annual audit. This move positions CPSEs as benchmarks for timely payment practices across corporate India. 

Benefits for MSMEs 

By processing invoices through TReDS, MSME suppliers can convert approved invoices into cash before the due date.  

The financing on TReDS is collateral-free, with banks and NBFCs offering competitive rates to discount invoices, providing MSMEs with quick access to working capital. 

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About TReDS 

TReDS is an RBI-regulated electronic platform operational since 2017, facilitating the financing and discounting of MSME trade receivables. 5 platforms, namely RXIL, M1xchange, Invoicemart, C2treds, and DTX, are currently operational.  

Invoice discounting on TReDS increased from ₹40,000 crore in FY 2021-22 to ₹3.47 lakh crore in FY 2025-26. 

The TReDS Reform Journey 

The TReDS platform went live in 2017. By November 2018, companies with a turnover above ₹500 crore and all CPSEs were mandated to onboard TReDS.  

In November 2024, the threshold was reduced to ₹250 crore. The latest mandate requires all operating CPSEs to route MSME invoice settlements through TReDS. 

Conclusion 

The mandatory use of TReDS for CPSEs aims to expedite MSME payments, providing collateral-free working capital. With over 8.70 crore MSMEs employing more than 38 crore people, this initiative addresses delayed payments, with invoice discounting on TReDS rising to ₹3.47 lakh crore in FY 2025-26. 

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