RBI grants in-principle approval to 3 applicants for setting up TReDS to ensure flow of funds for MSMEs
Updated: Nov 26, 2015 11:17:36am
Mumbai, Nov 26 (KNN) Making a big move towards improving the flow of funds into the MSME sector, the Reserve Bank of India (RBI) has decided to give “in-principle” approval to three applicants to set up and operate Trade Receivables Discounting System (TReDS). The three applicants are - NSE Strategic Investment Corporation Limited (NSICL) and Small Industries Development Bank of India (SIDBI), Mumbai; Axis Bank Limited, Mumbai; and Mynd Solutions Pvt. Ltd., Gurgaon, Haryana.
In the Union Budget for 2015-16 Union Finance Minister had highlighted the need for and use of TReDS for improving flow of funds to MSME sector by reducing the receivables realisation cycles.
TReDS will allow SMEs to post their receivables on the system and get them financed. This will not only give them greater access to finance but will also put greater discipline on corporates to pay their dues on time.
The “in-principle” approval was granted to the three applicants to set up and operate TReDS as per the Guidelines issued on December 03, 2014 under the Payment and Settlement System (PSS) Act 2007.
The “in-principle” approval granted will be valid for a period of 6 months, during which time the applicants have to comply with the requirements under the Guidelines and fulfil the other conditions as may be stipulated by the RBI.
“On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of “in-principle” approval, the Reserve Bank would consider granting to them a Certificate of Authorisation for commencement of the business of TReDS,” said RBI.
As the TReDS will be a payment system authorised under the PSS Act 2007, an elaborate four-tiered
The Governor, in his statement on September 04, 2013 had announced the intention to facilitate Electronic Bill Factoring Exchanges in the country, which could electronically accept and auction MSME bills against large companies so that MSMEs could be paid promptly.
The Reserve Bank of India published a concept paper on “Micro, Small & Medium Enterprises (MSME) Factoring-Trade Receivables Exchange” in March 2014 taking into account the interest expressed by a few entities and in consultation with select stakeholders. Subsequently, the draft guidelines for setting up of and operating TReDS were released on July 22, 2014. (KNN Bureau)
In the Union Budget for 2015-16 Union Finance Minister had highlighted the need for and use of TReDS for improving flow of funds to MSME sector by reducing the receivables realisation cycles.
TReDS will allow SMEs to post their receivables on the system and get them financed. This will not only give them greater access to finance but will also put greater discipline on corporates to pay their dues on time.
The “in-principle” approval was granted to the three applicants to set up and operate TReDS as per the Guidelines issued on December 03, 2014 under the Payment and Settlement System (PSS) Act 2007.
The “in-principle” approval granted will be valid for a period of 6 months, during which time the applicants have to comply with the requirements under the Guidelines and fulfil the other conditions as may be stipulated by the RBI.
“On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of “in-principle” approval, the Reserve Bank would consider granting to them a Certificate of Authorisation for commencement of the business of TReDS,” said RBI.
As the TReDS will be a payment system authorised under the PSS Act 2007, an elaborate four-tiered
The Governor, in his statement on September 04, 2013 had announced the intention to facilitate Electronic Bill Factoring Exchanges in the country, which could electronically accept and auction MSME bills against large companies so that MSMEs could be paid promptly.
The Reserve Bank of India published a concept paper on “Micro, Small & Medium Enterprises (MSME) Factoring-Trade Receivables Exchange” in March 2014 taking into account the interest expressed by a few entities and in consultation with select stakeholders. Subsequently, the draft guidelines for setting up of and operating TReDS were released on July 22, 2014. (KNN Bureau)
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