(MENAFN- KNN India)
RBI allows factoring businesses, insurers to participate in TReDs
Mumbai, June 8 (KNN)
The Reserve Bank of India (RBI)
on Wednesday decided to permit all institutions that undertake factoring business to participate as financiers in Trade Receivables Discounting System (TReDS) platform.
This move intends to improve access to funds for Micro, Small and Medium Enterprises (MSMEs).
“This would augment the availability of financiers on the TReDS platform,” said the regulator.
The Central bank also allowed taking insurance cover for invoicing facilities on the TReDS platform which would aid financiers to hedge default risks.
Accordingly, insurance companies are permitted as the“fourth participant” in TReDS, besides MSME sellers, buyers and financiers.
The insurance facility is likely to encourage discounting of payables of buyers irrespective of their credit ratings.
RBI has also allowed secondary market transactions on the TReDS platform.
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