State-run companies can step on to TReDS platform

TReDS, a trading platform that could ease financing constraints for small and medium enterprises, is set to take off after three years, after the government allowed state-run companies to use the platform.

It was the pet project of former RBI Governor Raghuram Rajan and could open up a Rs 20,000-crore market for the three firms licensed by the central bank.

In just three months of operations, Invoicemart, the Axis Bank-backed TReDS platform, has so far discounted invoices worth Rs 130 crore while M1xchange, promoted by Mynd Solutions, has discounted Rs 75 crore worth of invoices.

“We have already discounted more than 4,000 invoices on the platform worth Rs 130 crore. We have also on boarded 180 participants of which, 160 are SME sellers and the rest are buyers and financiers,” said Kalyan Basu, MD of Invoicemart.

“This initiative is a huge enabler for SMEs because financing happens in a transparent manner, is without collateral and they can get the best possible rates.”

TReDS is an online electronic institutional mechanism which facilitates the financing of trade receivables of MSMEs through multiple financiers.

The platform enables discounting of invoices of MSME sellers against large buyers through an auction mechanism that ensures prompt realisation of trade receivables at competitive market rates.

For a bank, any exposure on the platform qualifies for a priority sector lending; they also cost banks marginally but gain access to multitude of SME sellers and buyers without investing in infrastructure.

On October 24, the government made it mandatory for all major public sector units to register on TReDS within 90 days.