{"id":6211,"date":"2023-03-19T07:09:26","date_gmt":"2023-03-19T01:39:26","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=6211"},"modified":"2025-03-27T13:27:42","modified_gmt":"2025-03-27T07:57:42","slug":"what-is-the-trade-receivables-discounting-system-treds-platform","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-the-trade-receivables-discounting-system-treds-platform\/","title":{"rendered":"What is the Trade Receivables Discounting System (TReDS) platform?"},"content":{"rendered":"<h2><strong>About Trade Receivables Discounting System (TReDS) platform:<\/strong><\/h2>\n<ul>\n<li>It is an <strong>electronic platform <\/strong>for facilitating the <strong>financing\/discounting<\/strong> <strong>of trade receivables<\/strong> of Micro, Small, and Medium Enterprises (<strong>MSMEs<\/strong>) through multiple financiers.\u00a0<\/li>\n<li>These receivables <strong>can be due from corporates<\/strong> <strong>and<\/strong> <strong>other buyers<\/strong>, including Government Departments and Public Sector Undertakings (PSUs).<\/li>\n<li><strong>Purpose<\/strong>: To <strong>allow MSME sellers to discount invoices<\/strong> raised against major corporations, which <strong>helps them manage their working capital demands<\/strong>. The platform <strong>enables MSMEs to receive payments more quickly.<\/strong><\/li>\n<li><strong>Participants<\/strong>:\n<ul>\n<li><strong>Sellers, buyers, and financiers<\/strong> are the participants on a TReDS platform.<\/li>\n<li><strong>Only MSMEs<\/strong> can participate as <strong>sellers<\/strong> in TReDS.<\/li>\n<li><strong>Corporates, Government Departments<\/strong>, PSUs, and any other <strong>entity<\/strong> can <strong>participate as buyers<\/strong> in TReDS.<\/li>\n<li><strong>Banks, NBFC<\/strong> &#8211; Factors, and other <strong>financial institutions,<\/strong> as permitted by the RBI, can <strong>participate as financiers<\/strong> in TReDS.<\/li>\n<\/ul>\n<\/li>\n<li>RBI has <strong>not made it compulsory<\/strong> for any buyer, seller, or financier <strong>to participate in TReDS.\u00a0<\/strong><\/li>\n<li>The Government has <strong>made it compulsory for certain segments<\/strong> of companies <strong>to mandatorily register as buyers on the TReDS platform(s<\/strong>). The government directive, however, <strong>does not make it compulsory<\/strong> for these entities <strong>to perform transactions <\/strong>in TReDS.<\/li>\n<li><strong>How does TReDS work?<\/strong>\n<ul>\n<li><strong>Creation of a Factoring Unit (FU)<\/strong> &#8211; <strong>standard nomenclature<\/strong> used in TReDS <strong>for invoice(s) or bill(s) of exchange &#8211;<\/strong> containing details of invoices\/bills of exchange.<\/li>\n<li><strong>Acceptance of the FU by the counterparty<\/strong> &#8211; buyer or the seller, as the case may be;<\/li>\n<li><strong>Bidding by financiers;<\/strong><\/li>\n<li><strong>Selection of best bid<\/strong> by the seller or the buyer, as the case may be;<\/li>\n<li><strong>Payment made by the financier<\/strong> (of the selected bid) <strong>to the MSME seller<\/strong> at the agreed rate of financing\/discounting;<\/li>\n<li><strong>Payment by the buyer<\/strong> to the financier on the due date.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3>What are Trade receivables?<\/h3>\n<ul>\n<li>Trade receivables are defined as the <strong>amount owed to a business by its customers following the sale of goods or services on credit.<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1: What is a bill of exchange?<\/h3>\n<p>A bill of exchange is a written order used primarily in international trade that binds one party to pay a fixed sum of money to another party on demand or at a predetermined date.<\/p>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/www.financialexpress.com\/industry\/sme\/msme-fin-35000-invoices-worth-rs-7200-crore-financed-on-treds-every-month-rbi-governor-shaktikanta-das\/3014965\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>35,000 invoices worth Rs 7,200 crore financed on TReDS every month: RBI Governor Shaktikanta Das<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>TReDS is an electronic platform for facilitating financing\/discounting of trade receivables of MSMEs.<\/p>\n","protected":false},"author":5,"featured_media":6212,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-6211","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/6211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=6211"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/6211\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/6212"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=6211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=6211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=6211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}