Enabling MSME Financing Through TReDS Platform

At TReDS, MSMEs can avail invoice discounting through various platforms approved by the Reserve Bank of India (RBI), specially the ones who have surpassed Rs 1 lakh crore in business volume. This highlights the growing popularity and acceptance of the Trade Receivables Discounting System (TReDS) among businesses in India.

In the financial year 2023-24, these platforms facilitated the discounting of invoices worth more than Rs 43,000 crores, reflecting a remarkable 100% year-on-year growth compared to the previous fiscal year when it discounted invoices worth more than  Rs 23,100 crores. This impressive growth can be attributed to the increasing awareness and adoption of TReDS by both corporates and micro, small, and medium enterprises (MSMEs).

TReDS is a digital platform that allows MSMEs to get their invoices discounted and paid upfront by financiers, solving the long-standing issue of delayed payments from large corporations. These discounting platforms have played a crucial role in facilitating this process, enabling improved liquidity for MSMEs while ensuring timely payments at competitive rates.

This represents just the beginning of the vast opportunities ahead in the MSME financing space. By offering competitive interest rates, prompt disbursals, and streamlined processes,  are creating immense opportunities to boost the growth of MSMEs in India.

The credit gap in India's MSME sector stands at a staggering $530 billion, with only around 14% of the 64 million MSMEs having access to formal credit. TReDS platform plays a crucial role in bridging this credit gap by providing MSMEs with access to much-needed financing.

Moreover, introduction of Small-to-Small (S2S) financing has expanded the scope of TReDS. This aims to bridge the credit gap and integrate tier 2 and tier 3 MSMEs into the formal credit ecosystem. 

Through TReDS, the cost of financing for MSMEs is reduced by 5-8%, significantly lowering their business expenses. These savings are passed on to corporate customers, incentivizing both parties to adopt TReDS and fostering a mutually beneficial ecosystem.



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