Payments for products and services purchased from MSMEs must now be processed through the Trade Receivables Discounting System (TReDS) platforms authorised by the Reserve Bank of India (RBI), according to a directive from the central government. The reform is anticipated to greatly alleviate payment delays and enhance the availability of affordable working capital for micro, small, and medium-sized enterprises (MSMEs) nationwide.
As per the RBI’s regulations, CPSEs are now obligated to publish information on invoices routed and settled through TReDS for MSME clients, as stated in an official statement. Also, as part of their annual audit, all CPSEs are required to have a statutory auditor’s certificate that verifies their TReDS registration and compliance. This adds another layer of accountability and transparency.
Officials hope that by highlighting Central Public Sector Enterprises’ exemplary punctuality in making payments, this program will persuade other big corporations to follow suit. The government’s emphasis on bolstering the MSME ecosystem is further underscored by this decision, which satisfies a major pledge made in the Union Budget 2026-27.
The new system allows MSME suppliers to quickly turn any approved CPSE invoice posted on TReDS into working capital, even before the payment due date. The platform allows MSMEs to access funds at reasonable interest rates through collateral-free financing, meaning they are not reliant on the seller. Banks and Non-Banking Financial Companies (NBFCs) compete to offer favourable invoice discounting rates.
There will be quicker payments, better cash flow, and more financial inclusion for small firms if all CPSE procurement invoices are routed through TReDS, the government said. In addition to fostering a more efficient and open payment ecosystem, the platform increases transparency in procurement transactions.
More than 8.70 crore businesses are listed on the Udyam Portal, employing more than 38 crore people; MSMEs continue to be the engine that drives India’s economy. In 2017, TReDS went live as an electronic platform governed by the Reserve Bank of India (RBI). It allows various financial institutions to compete for the opportunity to finance and discount trade receivables from micro, small, and medium enterprises (MSME) that come from corporate purchasers, government departments, and public sector organisations.
Image: ET
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