New Delhi, Dec 5 (KNN) In compliance with Trade Receivables Discounting System (TReDS) guidelines issued by RBI, Union Bank of India (UBI) has partnered with M1xchange and joined its TReDS platform for factoring of the invoices of the Micro, Small and Medium Enterprises (MSMEs).

This step has been taken as Prime Minister made it mandatory for corporates and financial institutions to join TReDS platform for the betterment of MSMEs.

The use of TReDS is aimed at improving the flow of funds to the MSMEs by reducing the realization cycles of receivables.

TReDS allows MSMEs to post their trade receivables on the system and get them financed.

A formal agreement between UBI and M1xchange was signed by P.S. Rajan, General Manager-Credit Policy and MSME, Union Bank of India and Ramesh Bisht, CFO, Mynd Solutions Pvt Ltd.

"To overcome the perennial issue of elongated receivable realizations by MSMEs, TReDS has been conceptualized,” said P S Rajan, General Manager-Credit Policy and MSME Department, Union Bank of India

Rajan said, “In the coming days, TReDS is going to expand the horizon and facilitate ease of doing business for all stake holders viz. MSMEs, Corporates, Banks and Financing agencies.”

“Our Bank's tie up with M1xchange is another milestone in MSME, micro segment credit dispensation," he added.

Despite the important role played by MSMEs in country's overall economic growth & employment generation, they continue to face constraints in obtaining adequate finance.

This is particularly in terms of their ability to convert their trade receivables into liquid funds.

TReDS is a digital platform where MSMEs can post their trade receivables on the system and get them financed at a competitive rate.

This not only gives them greater access to finance but also puts greater discipline on corporates to pay their dues on time.

At the same time adequate financial support to such MSMEs through this unique online platform with inbuilt hassle free process will be easier for businesses to adopt.

Launched by outsourcing and consulting firm Mynd Solutions, M1xchange has already on-boarded many large corporates, PSUs, their MSME vendors and financiers (banks - public, private, foreign and NBFCs) to do the financing transactions.