In a recent webinar hosted by The Indian Paint Association (IPA), affiliated to CII on “Decoding the Economic Package Reviving Growth – Reinventing Strategies”, Ketan Gaikwad, MD & CEO of Receivables Exchange of India Limited (RXIL) addressed an awareness session on TReDS. He stressed upon the importance of TReDS in helping MSMEs in better management of their cashflows. TReDS is an institutional mechanism set up by the Reserve Bank of India to facilitate trade receivable financing of MSMEs from corporate buyers through multiple financiers.
The core objective of the webinar was to be able to address and educate the participants about the functioning and benefits of TReDS which has ensured MSMEs to receive payments worth Rs. 19,000 crores on time.
Currently, the payment recovery cycle falls above 90 days for a majority of MSMEs and payment delays become a huge problem for business continuity of such enterprises. In a recent interview, Nitin Gadkari, Union Minister for MSMEs, said that the Central, state governments, government-owned companies and the private sector owe small business outstanding dues worth ₹5 lakh crore. TReDS (Trade Receivables Discounting System) could be a viable solution to settle these dues.
“In the pandemic induced lockdown alone, RXIL has noted an uptick of MSMEs and their large corporate buyers becoming a part of the platform as more people realise the importance of invoice discounting. By enabling digital onboarding and a waiver of onboarding charges, the platform has been able to provide their services to MSMEs in a seamless manner,” Gaikwad explained.
MSME Ministry vide its Notification dated November 02, 2018, had mandated all Corporates with a turnover of more than INR 500 crores and all Public Sector Enterprises to get themselves registered on the TReDS platform to ensure liquidity for MSME Suppliers against their receivables.
“We urge MSMEs and corporates to register with TReDS and avail the benefits of quick and easy financing. TReDS offers a win-win proposition to large corporate buyers and their MSME sellers. The MSMEs get their dues paid on time while the corporates can enjoy an extended credit period,” the RXIL Chief Executive appealed to the webinar participants and MSME.
Both the seller and the buyer need to be registered on RXIL’s platform to take the benefit of TReDS. The registration charges on the platform have been waived off till 30th September 2020 under the SIDBI’s Swavalamban Crisis Response Fund.
About Receivables Exchange of India:
Receivables Exchange of India is an RBI accredited TReDS (Trade Receivables Discounting System) Exchange Platform. Started as a joint venture between Small Industries Development Bank of India (SIDBI) and National Stock Exchange of India Limited (NSE) with State Bank, ICICI and Yes Bank as other stakeholders. RXIL empowers small businesses to realize their growth potential by accelerating their collections. With its innovative digital platform, MSMEs today can auction their trade receivables at competitive rates, through online bidding by financiers, and gain access to capital in less than 48 hours. This helps SMEs with major liquidity problems and puts a healthy cash flow back into their working cycles for smoother runs in their businesses. RXIL has close to 3,000 MSMEs, 500 buyers and 35 financiers on the platform.