The Reserve Bank of India had published a concept paper on “Micro, Small & Medium Enterprises (MSME) Factoring-Trade Receivables Exchange” in March 2014 with the objective of eliciting public comments on the matter of setting up an institutional mechanism for facilitating financing the trade receivables of Micro, Small and Medium Enterprises (MSMEs) due from the corporate buyers.
On the basis of the public comments received on the concept paper, a series of interactions were held with banks and non-bank factors, SIDBI, NSDL and NSE. Based on these inputs and interactions, RBI has now prepared the Draft Guidelines for setting up and operating the institutional arrangement for meeting the financing requirements of MSMEs through discounting their trade receivables. The system will be known as the Trade Receivables Discounting System (TReDS).
The draft guidelines outline the requirements and the basic tenets of operating the receivables discounting system, and also prescribe the eligibility criteria for entities desirous of setting up and operating such a system.
To this end, the Reserve Bank of India is seeking comments from the public/stakeholders on the draft guidelines forImplementation of Trade Receivables Discounting System (TReDS) in India. Specific and actionable comments would be highly appreciated.