RBI proposes expansion in scope of activity of TReDS

Brief Overview:

A press release on the Statement on Developmental and Regulatory Policies dated 8th February 2023, issued by RBI, sets out developmental and regulatory measures relating to inter-alia payment settlement systems.

Technical Details:

With the objective of facilitating the financing of trade receivables of Micro, Small and Medium Enterprises (“MSMEs”), RBI issued guidelines on Trade Receivables Discounting System (“TReDS”) in December 2014. Pursuant to those guidelines, RBI proposes to expand the scope of activity of TReDS platforms by way of introducing the following:

1)   Permitting insurance facility on TReDS, and insurance companies to participate as a fourth buyer on TReDS, apart from the MSME sellers, buyer, and financiers.

2)   Permitting entities eligible to undertake factoring business under the Factoring Regulation Act, to participate as financiers in TReDS.

3)   Enabling secondary market operations on TReDS platform to allow financiers to offload their existing portfolio to other financiers.

For further details, please see:

Reserve Bank of India – Press Releases (rbi.org.in)

For any queries / clarifications, please feel free to ping us and we will be happy to chat:

Mr. Ankit Sinha (ankit.sinha@jclex.com)
Mr. Saurabh Sharma (saurabh.sharma@jclex.com)
Ms. Rupul Jhanjee (rupul.jhanjee@jclex.com)

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