New Delhi, Oct 26 (KNN) In the din of Government’s announcement of trillion rupee pumping in the economy, an initiative  of  crucial importance to Micro, Small and Medium Enterpirses (MSMEs) has been overlooked. On Tuesday, in the lofty presentation on the Indian economy made in the  presence of  the finance minister Arun Jaitley, some important incentives for the MSME sector were also announced.

The most significant is, that the PSUs will be asked to register themselves in  TReDS platform of RBI within 90 days.

TReDS, abbreviation of Trade Receivables electronic Discounting System, is the brainchild of  Raghuram Rajan, the erstwhile Governor of RBI.

With focus on releasing money to suppliers, particularly MSMEs, held in unpaid Bills, the electronic platform proposed an discounting market for the  unpaid Bills.

If both, the purchaser and the  supplier are registered on the platform, any bill uploaded by the supplier may be endorsed by the Buyer for payment and then the Bill can be auctioned on the platform among interested market operators.

So if run efficiently, TReDS  may provide an acceptable immediate amount to a MSME against the ‘to be paid’ Bill drawn on  a large buyer.

Though appears to be a logical approach to the problem of huge ‘receivables’ of MSME suppliers, the platform launched almost two year back, is in limbo, so far. 

The main reason is, to make the Bills tradable, first the buyer, on whom a Bill has been drawn, has to accept it for payment. Then only the discounting agency will be assured of getting  money paid in discounting the Bill, back.

While the big corporates always treat the MSME suppliers as charity recipients, even the Government owned Companies so far shirked from participating in the  TReDS.

Now as per the announcement, Public Sector Companies have to register in the TReDS platform  and accept (or refuse) the uploaded Bills drawn on them.

If this happens, Banks may be  willing to discount the Bills on the platform as this will  be a secured instrument for them and at the same time minimise high receivable burden of the MSMEs financed by the Banks.

V K Agarwal, a reputed entrepreneur of Lucknow and Past President of  the Federation of Indian Micro and Small & Medium Enterprises (FISME) commented that this  is surely a welcome step and will address a long pending demand of the MSMEs.

But, Agarwal also quipped, that along with central PSUs, state PSUs and other statal bodies should also be asked to register on TReDS. The financial disciplines of the state corporations are worse than the central PSUs and once supplied to them, MSMEs simply do not guess when the payment will come, rues Agarwal.

He also mentioned that TReDS being a level marketplace, why not Government compel the private corporates also to join the platform.

But today even this baby step by the Government may bring great relief to the MSMEs reeling under stifling cash flows. (KNN/DB)