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Success rate for discounting MSME receivables on TReDS improved in FY21: RBI

TReDS is an electronic platform for facilitating the financing/discounting of trade receivables of MSMEs through banks and non-banking finance companies

The success rate of the Trade Receivables Discounting System (TReDS) for financing trade receivables of micro, small and medium enterprises (MSMEs) improved in FY21, with 91.29 per cent of the invoices uploaded on the electronic platform getting financed versus 90.16 per cent in FY20.

TReDS is an electronic platform for facilitating the financing/discounting of trade receivables of MSMEs through banks and non-banking finance companies (NBFCs).

These receivables can be due from corporates and other buyers, including Government Departments and public sector undertakings (PSUs), according to the Reserve Bank of India (RBI).

The number of invoices financed on TReDs increase by about 65 per cent year-on-year (y-o-y) to 7,86,555 in FY21 against 4,77,969 in FY20, per RBI’s Report on Trend and Progress of Banking in India 2020-21.

The value of invoices finances was up about 53 per cent y-o-y to ?17,080 crore in FY21 against ?11,166 crore.

Credit supply to rise

The report noted that going forward, with the central government permitting non-factor NBFCs and other entities to offer factoring services, credit supply to MSMEs through the platform is expected to increase further.

On-boarding of more public sector enterprises on the TReDS can make a material difference in making the scheme more effective, it added.

TReDS was launched by the RBI in 2017 to facilitate financial inclusion of MSMEs