(MENAFN- KNN India)
New Delhi, Jan 17 (KNN) In a bid to enhance financial inclusion for India's micro, small, and medium enterprises (MSMEs), the government is exploring the introduction of a second Trade Receivables Discounting System (TReDS) window for transactions ranging from Rs 1 lakh to Rs 10 lakh, officials said.
The move aims to address challenges faced by smaller enterprises in accessing timely working capital while fostering business growth.
The new TReDS window will enable banks to access digital data of MSME suppliers, including their names, GST details, and transactional history over the past 2-5 years.
This will mitigate banks' concerns about discounting smaller invoices, which are often deemed cost-intensive. The inclusion of a credit guarantee scheme is also under consideration to further reduce risks for financiers.
TReDS, an online platform facilitating invoice financing, allows MSMEs to receive faster payments by selling unpaid invoices at a discounted rate.
Despite its potential, many MSMEs face hurdles such as high onboarding fees, unregistered buyers, and dependency on buyer approvals for bill discounting.
“The second window will address these gaps by targeting smaller transactions and offering an unsecured facility with calculated risks,” an official said.“It is crucial to empower MSMEs to upload proof of supply and invoices without awaiting buyer approval”, reported mint.
MSMEs form the backbone of the Indian economy, contributing significantly to employment and entrepreneurship.
However, delayed payments from large buyers often hamper their growth, as some companies use MSMEs' credit as working capital instead of relying on banks.
The integration of GST data with the TReDS platform is expected to streamline operations, offering transparency on payment timelines and buyer behaviour. This data can be leveraged through AI for monitoring and automation, ensuring timely payments.
Industry experts, however, stress the need for policy reforms to make TReDS more accessible.
Anil Bhardwaj, Secretary General of FISME, suggested waiving registration fees and expanding buyer participation to maximize impact.
With over 63 million enterprises in the MSME sector, the government's initiatives aim to create a robust financial ecosystem that encourages risk-taking and sustains growth. The proposed measures are expected to be operational within the next 3-4 months.
(KNN Bureau)
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