TReDS to regulate trade receivables among MSMEs, large corporations and financiers

TReDS, a regulatory framework by the Reserve Bank of India under the Payment and Settlement Systems Act 2007 (PSS Act) to regulate the trade receivables among MSMEs, large corporations and financiers. As per sources, the MSME suppliers for NTPC Ltd can now use Trade Receivables Discounting System (TReDS) platform which will enable them to access working capital.

TReDS allows the MSMEs to post their trade receivables on the system and get them financed which usually struggle to stay afloat due to paucity of working capital.

The general manager at NTPC, S C Chavady said, “TReDS is a promising concept, coming at a time when the government is also giving a push to the digital economy ecosystem. M1xchange platform would provide a reliable tool to our vendors due to its competitive pricing mechanism.”

The PNB GM-MSME Neerja Kumar also said that they are encouraged to see PSUs like NTPC helping their MSMEs to get early liquidity by bill discounting on M1xchange.

A statement issued by MIxchange said that, “they have has started transacting with NTPC limited and the use of TReDS is aimed at improving the flow of funds to the MSMEs by reducing the realization cycles of receivables. The coming together of M1xchange and NTPC Limited would address the financing concerns of MSMEs in the power sector which is an important segment of the economy.”

The statement further said that, the digital platform of M1xchange came into existence in April last year. It is owned by outsourcing and consulting firm Mynd Solutions. M1xchange has already been on-board with many large corporates, their MSME vendors and financiers (banks – public, private, foreign and NBFCs) to do the financing transactions.”

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