RXIL and Tata AIG initiate The 1st Trade Credit Insurance Transaction in Sandbox Environment on the TReDS Platform

Receivables Exchange of India Ltd. (RXIL) recently initiated a Trade Credit Insurance (TCI) backed transaction with Tata AIG as the insurer and ICICI Bank, YES Bank as the financiers in Sandbox environment. This is the first time a TReDS platform has tested the efficacy of TCI backed transaction improving the ability of financiers in assigning credit limits to corporates. TCI, once implemented post regulatory approvals, will enable financiers to discount the invoices drawn on lower rated corporate buyers, by their MSME sellers and will improve the liquidity from lenders.

The adoption of Trade Credit Insurance on TReDS will pave the way for a completely digital bite-sized credit insurance model. Buying credit insurance on TReDS will be as simple as buying travel insurance while buying an air ticket on a travel portal, devoid of the lengthy paperwork generally associated with trade insurance.

Ketan Gaikwad, MD & CEO of Receivables Exchange of India Pvt. Ltd commented, “There has been a need for Trade Credit Insurance (TCI) on TReDS, we are glad that the regulators provided us with a roadmap in a time-bound manner. TCI will help financiers in mitigating the risk of non-payment and insolvency/defaults of the buyers. We collaborated with TATA AIG as the insurer, ICICI and YES Bank as financiers to execute the transaction. This is expected to increase the current throughput of the platform and put our country ahead in league with other developed markets the way this product has been designed"

Trade Credit Insurance is a structural reform that has been re-introduced in India after a gap of 10 years. Globally, factoring and insurance go hand in hand, however, in India, both are being seen with a renewed interest as the economy is gradually moving towards formalisation of small businesses. TCI on TReDS was one of the recommendations by U.K Sinha Committee report on MSME credit. The working group constituted by IRDAI reviewed the guidelines on TCI, which has paved the way for testing in Sandbox environment.

Ajay Gupta, Head Transaction Banking and SMEG, ICICI Bank said, “We are delighted to partner with RXIL for the Trade Credit Insurance (TCI) and successfully piloting the test transaction under IRDA’s regulatory sandbox proposal of TATA AIG. We are sure that TCI will significantly increase the ability of the buyers to get financiers to discount the invoices raised by their MSME suppliers, thereby benefitting a much larger universe of MSMEs. We believe TCI will gather further momentum when it gets approved as Credit Risk Mitigation Technique for lending."

Ajay Rajan, Global Head - Transaction Banking Group, YES BANK said, “With this successful pilot of the Trade Credit Insurance (TCI) backed structure in the Sandbox environment, YES BANK in partnership with RXIL has taken yet another significant step in its efforts towards digitizing and bringing efficacy in the financial supply chain arrangement between Corporate Buyers and their MSME sellers. TCI being a globally accepted Trade Financing & Credit Enhancement structure could potentially help in augmenting and expanding the scope of supply chain financing, thereby supporting the ‘Atmanirbhar Bharat' initiative of the Government.

Risk management and mitigation is an important component of a well-oiled supply chain that drives the economic engine. A simplified trade credit insurance regime that includes MSMEs will encourage more liquidity from lenders and improve the industry’s resilience allowing them to expand faster.


About Receivables Exchange of India:

Receivables Exchange of India is an RBI accredited TReDS (Trade Receivables Discounting System) Exchange Platform that 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 on a non-recourse basis at competitive rates, through online bidding by financiers, and gain access to capital in less than 48 hours. This helps MSMEs ease liquidity problems and puts a healthy cash flow back into their working cycles for smoother runs in their businesses. RXIL has over 4,800 MSMEs, 550 buyers and 39 financiers on the platform.

TReDS Processed Payments worth Rs. 19,000 Crores to Ensure Timely MSME Payments: Ketan Gaikwad, MD & CEO of Receivables Exchange of India (RXIL)

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 30^th 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.

Govt. E-Marketplace signs an MOU with TReDS platform RXIL and Arteria Technologies

Finance Minister Nirmala Sitharaman emphasised on the importance of GeM and TReDS in the upliftment of the MSME sector during her Budget speech. In light of this, GeM (Government eMarketplace) just signed an MoU with TReDS platform Receivables Exchange of India to take this initiative even further. This is an important and immediate step taken to help see the Feb-01 announcements into fruition.

Mr. Ketan Gaikwad, CEO, RXIL Ltd., said on the occasion, “Close to 53% of transactions on GeM (Govt. E Marketplace) are initiated by MSMEs. Hon’ble FM announced during this year’s union budget to increase the turnover of GeM from the current levels of INR 50,000 crore to INR 3 lakh crore. For the proposed turnover mandate, it is necessary to have the alternate financing mechanism in place, the integration between Trade Receivables Discounting System (TReDS), and GeM as suggested in the UK Sinha Committee report will allow PSUs/Govt. departments to do procurement without blocking their own funds, while ensuring timely payments to MSMEs. The MoU will immensely benefit, MSMEs and CPSEs/PSUs/Govt Departments while achieving the proposed goal of INR 3 lakh crore throughput."

The Economic Survey 2019-2020 stated that currently 57,531 MSME sellers and service providers are registered on the GeM portal. Central PSUs are required to procure at last 25% of their total purchases from MSMEs and PSUs have procured 28.26% of total procurement from MSMEs, crossing the minimum threshold of 25%.

Mr Gaikwad, also added, “TReDS has become a stable payment system with over INR 15,000 crore worth of throughput across the platforms. The Govt. has seen the effectiveness of TReDS in ensuring a stable supply of credit to MSMEs, the MoU is a step in the direction of extending its benefit to a larger universe of MSMEs."

Mr Sriram Kanuri, CEO, Arteria Technologies Pvt. Ltd., remarked on the landmark association as a proud moment. We are excited to extend the expertise and the existing association with TReDs by deploying FinessArt for GeM as well and support the Digital India journey and further the cause for MSME sector. 

RXIL - A SIDBI-NSE Initiative Receives Approval to Launch TReDS Exchange Platform

Reserve Bank of India has on December 1, 2016 authorised Receivables Exchange of India Limited (RXIL) to launch India’s first trade receivables exchange platform – an online marketplace for MSMEs, Buyers and Financiers. RXIL has been promoted by SIDBI, the apex financial institution for promotion and financing of MSMEs in India and National Stock Exchange of India Limited (NSE) the premier stock exchange in India. SBI, ICICI Bank, YES Bank, SBI Capital Markets Ltd., and ICIC Securities Ltd., are the other joint investors. RBI last year granted in principle approval to three applicants to launch the platform including the joint venture of SIDBI and NSE. RXIL, the company promoted by SIDBI and NSE is the first among the three applicants now to receive the authorisation to launch the platform.

The Trade Receivables Discounting Systems (TReDS), an automated system driven platform is expected to benefit MSMEs by facilitating them to auction their trade receivables at competitive market rates through transparent bidding process on the platform by multiple financiers. TReDS will be the first attempt in India for introduction of factoring without recourse and help not only quick realisation of receivables but also appropriate price discovery.

Dr. Kshatrapati Shivaji (IAS), Chairman and Managing Director, SIDBI said that this major initiative is the continuum of series of SIDBI’s efforts in addressing the gaps in the MSME ecosystem. Dr. Shivaji reiterated that SIDBI way back in early nineties piloted the Receivable Financing Scheme [RFS] in reverse factoring process in India for addressing the delayed payments problem of MSMEs. SIDBI through the Scheme has demonstrated how credit profile of large corporates could be leveraged for bringing down the cost of financing of receivables of MSMEs with more than 23000 registered MSME beneficiaries.

Taking forward, SIDBI and NSE joined together later to launch web based discounting platform viz. NTREES with SIDBI as a single financier on the lines of NAFIN model in MEXICO. TReDS in a way is a graduation of NTREES operations envisaging multiple financiers. Dr. Shivaji hoped that the TReDS platform would compliment the other major digital initiatives by SIDBI viz. www.standupmitra.in, www.sidbistartupmitra.in, and www.udyamimitra.in. He added that these portals addressed to help meet most of the requirements of all the aspirants viz. be it startups, first time entrepreneurs and small enterprises through online connection of all the stakeholders in the form of market place. On successful implementation of GSTN next year, he hoped that the entire canvas of mercantile/commercial transactions in India could be digitised in full form.

While SIDBI brought in its expertise spanning two decades on the subject for MSME finance and factoring operations, NSE came in with its technical expertise in managing exchange operations to commence the TReDS platform successfully.

“NSE has always been on the forefront of innovation and has played a catalytic role in reforming the Indian capital markets. As an exchange we have been focussing on the growth of SMEs in India. To support this, NSE launched the NTREES – an online bill discounting platform jointly with SIDBI in 2009 and subsequently launched EMERGE– a platform for listing growing SME companies to meet their capital requirements. With the approval to launch the TReDS platform, NSE will further support the growth of SMEs in the Indian economy” said Mr. J. Ravichandran, CEO Incharge, NSE.

Banks will benefit by financing the trade receivables of MSME Sellers as RBI has allowed them Priority Sector Lending benefits on the factoring units financed on TReDS platform. Corporates will also benefit through reduced input cost of goods and servicesby facilitating the MSME Sellers to get financed at competitive market ratesand allow them to efficiently manage their cash flows; while complying with the MSMED Act, 2006. RXIL’s TReDS supports both factoring (single seller with multiple buyers) and reverse factoring (single buyer with multiple sellers).

Image : Kshatrapati Shivaji, IAS, Chairman & Managing Director