The TReDS will be an authorised payment system and also be subject to the oversight of the RBI
The Reserve Bank of India (RBI) on Thursday issued operative guidelines for mobile banking transactions seeking to standardise mobile banking services.
The guidelines for setting up and operating the Trade Receivables Discounting System (TReDS), a scheme for setting up and operating the institutional mechanism to facilitate the financing of trade receivables of micro, small and medium enterprises (MSMEs) from corporate and other buyers, including government departments and public sector undertakings (PSUs) through multiple financiers.
In the first phase, the TReDS would facilitate the discounting of these factoring units by the financiers resulting in flow of funds to the MSME with final payment of the factoring unit being made by the buyer to the financier on due date. In the second phase, the TReDS would enable further discounting, re-discounting of the discounted factoring units by the financiers, thus resulting in its assignment in favour of other financiers.
According to RBI, entities desirous of setting up and operating the TReDS are required to have a capital of Rs25 crore, it should be able to provide electronic platform, have a robust MIS system to dissemination information in real time basis, a suitable business continuity plan and online surveillance capability to monitor positions, prices and volumes in real time so as to check system manipulation.
Last year in September, RBI governor had declared the central bank's intention to facilitate Electronic Bill Factoring Exchanges in the country, which could electronically accept and auction MSME bills against large companies so that MSMEs could be paid promptly.
MSME sector faces the problem of delayed payment mainly due to their dependency on their buyers within corporate and other sectors, including government departments, undertakings. They are often unable to take up the problem of delayed payments through appropriate institutional setup created for the purpose.
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