RBI proposes to increase NACH mandate limit on TReDS to enable better finance to MSMEs

New Delhi, Feb 10 (KNN) Keeping in view the requests received from stakeholders and to further enhance the ease of financing the growing liquidity requirements of MSMEs, the Reserve Bank of India (RBI) has proposed to increase the NACH mandate limit.

In its press release issued on Thursday the RBI has proposed to increase the NACH mandate from Rs 1 crore at present to Rs 3 crore for TReDS related settlements.

The Trade Receivables Discounting System (TReDS) facilitates the financing of trade receivables of Micro, Small and Medium Enterprises (MSMEs). Transactions in TReDS are settled through the National Automated Clearing House (NACH) system. 

TReDS is an electronic platform for facilitating the financing / discounting of trade receivables of Micro, Small and Medium Enterprises (MSMEs) through multiple financiers. These receivables can be due from corporates and other buyers, including Government Departments and Public Sector Undertakings (PSUs).

Micro, Small and Medium Enterprises (MSMEs) play an important role in the economic fabric of the country. 

The sector had been facing constraints in obtaining adequate finance, particularly in terms of their ability to convert their trade receivables into liquid funds. To address this pan-India issue, setting up of and operating TReDS was conceptualized. (KNN/AT)