RBI announces norms for Trade Receivables Discounting System

To make it easier and faster for Micro, Small And Medium Enterprises (MSMEs) to get their dues, the Reserve Bank of India put out final guidelines for setting up of a Trade Receivables Discounting System (TReDS). TReDS will be like an exchange where an MSME that has some receivables pending from a large corporate will be able to trade the bill. So, if an MSME has to realise Rs.100 from a corporate, it can exchange the bill with one of the participating entities on the exchange for, say, Rs.95. The buyer of the bill will then recover the Rs. 100 from the corporate concerned, pocketing the profit of Rs.5.