TReDS Platform set to take off

TReDS, a trading platform that could ease financing constraints for small and medium enterprises, is set to take off after three years, after the government allowed state-run companies to use the platform.

It was the pet project of former RBI Governor Raghuram Rajan and could open up a ₹.20,000-crore market for the three firms licensed by the central bank.

In just three months of operations, Invoicemart, the Axis Bank-backed TReDS platform, has so far discounted invoices worth ₹.130 crore while M1 Exchange, promoted by Mynd Solutions, has discounted ₹.75 crore worth of invoices.

This initiative is a huge enabler for SMEs because financing happens in a transparent manner, is without collateral and they can get the best possible rates.

TReDS is an online electronic institutional mechanism which facilitates the financing of trade receivables of MSMEs through multiple financiers.

The platform enables discounting of invoices of MSME sellers against large buyers through an auction mechanism that ensures prompt realisation of trade receivables at competitive market rates. For a bank, any exposure on the platform qualifies for a priority sector lending; they also cost banks marginally but gain access to multitude of SME sellers and buyers without investing in infrastructure.

On October 24, the government made it mandatory for all major public sector units to register on TReDS within 90 days.

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