RBI Pushes TReDS Interoperability To Prevent Market Concentration

New Delhi, Jul 8 (KNN) The Reserve Bank of India (RBI) is pushing for interoperability in the Trade Receivables Discounting System (TReDS) to promote greater competition among platform operators and prevent business concentration among a few entities, according to sources.

RBI Pushes for Interoperable TReDS Ecosystem

The RBI has already held discussions with industry participants and shared a process note outlining the proposed framework. While stakeholders have a broad understanding of the model, implementation is expected to take time.

At present, the three original TReDS platforms, Receivables Exchange of India Ltd. (RXIL), Invoicemart and M1xchange, account for nearly 90 percent of total transaction volume, according to RBI data for May, reported Economic Times.

Interoperability Aims to Boost Competition

Interoperability will allow businesses registered on one TReDS platform to transact with participants on other platforms, enabling financiers to access a wider pool of borrowers and encouraging business growth across newer operators.

The initiative was identified as one of the key objectives in the RBI's Payments Vision 2028 document released in March, with the regulator now actively pursuing its implementation.

Move May Reshape Digital Invoice Financing Market

Industry sources said the move could disrupt the business models of established platform operators, which have invested significantly in developing the TReDS ecosystem. However, the RBI is keen to ensure a more open and competitive market structure.

The central bank also follows an on-tap licensing framework for TReDS platforms to encourage the entry of additional players and expand access to receivables financing for micro, small and medium enterprises (MSMEs).

The development comes at a time when M1xchange is in the process of acquiring a 100 percent stake in C2FO India, further consolidating activity in the digital invoice financing space.

(KNN Bureau)