Brief Overview:
The Ministry of Micro, Small and Medium Enterprises (“MSME Ministry”) vide its notification S.O. 4845(E) dated 7th November 2024 (“Notification”) has superseded the erstwhile notifications on registration of large companies and central public sector enterprises (“CPSEs”) on trade receivables discounting system platforms (“TReDS”).
Technical Details:
According to the Notification, the MSME Ministry has mandated that all companies registered under the Companies Act, 2013, and CPSEs with a turnover of INR 2,50,00,00,000 (Indian Rupees Two Hundred and Fifty Crore) or more must now register on the TReDS platform. Previously, this requirement applied only to companies and CPSEs with a turnover of INR 5,00,00,00,000 (Indian Rupees Five Hundred Crore) and above.
Eligible companies and CPSEs are required to complete their registration on the TReDS platform by 31st March 2025.
Key Takeaways:
The initiative by the MSME Ministry mandating more MSMEs to register on TReDS will give such MSME’s quicker access to cash flow, improving their liquidity and working capital. However, as more MSMEs join TReDS, the quality of receivables may vary leading to an increased risk of defaults on payables.
For further details, please see:
egazette.gov.in/(S(snzk0vghl1spitwf5bw5t21i))/ViewPDF.aspx
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