Govt Mandates CPSEs To Route MSME Payments via TReDS Platforms

New Delhi, Jul 6 (KNN) The Ministry of Micro, Small and Medium Enterprises (MSMEs) on June 30 mandated all operational Central Public Sector Enterprises (CPSEs) to settle invoices for goods and services procured from MSMEs through Trade Receivables Discounting System (TReDS) platforms authorised by the Reserve Bank of India (RBI), with the notification taking effect the same day.

The mandate, issued under Sections 9 and 10 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, requires CPSEs to route MSME invoice settlements through any RBI-authorised TReDS platform, though it does not compel MSME suppliers to discount or finance their receivables on the platform — that remains optional.

Key Provisions

Under the notification, CPSEs and any other authority, body or entity notified by the Central Government must disclose details of MSME invoices routed and settled through TReDS, in a form and manner prescribed by the RBI. 

CPSEs are further required to obtain certification from their statutory auditors, during annual audits, confirming registration with at least one TReDS platform and compliance with the notification's guidelines.

Background

MSMEs have always faced payment delays on goods and services supplied, leading to working capital constraints and cash flow challenges. 

While TReDS was introduced to enable faster payments and access to financing against receivables, its adoption among government-linked entities had remained limited. 

By making TReDS the mandatory settlement route for CPSEs, the government aims to improve transparency, accountability and payment efficiency, while preserving MSMEs' choice over whether to seek financing through the platform.

(KNN Bureau)