The government has ordered its top companies to bring in their entire vendor network comprising thousands of suppliers on to the TReDS, an electronic trading platform to trade receivables, as it aims to unclog the payment pipelines that’s squeezing funding for small enterprises
Hindustan Aeronautics, ONGCNSE 1.86 % and Indian OilNSE 0.38 % are among scores of firms that have been told by the Department of Public Enterprises to ‘register immediately’ their vendors on the network or face penal action, said people familiar with the matter.
“All CPSEs must ensure that the payments to MSE vendor be made using online mode within the stipulated time period of the contract and not more than 45 days in any case,” read the circular from the DPE. “Though a number of CPSEs have already registered on the TReDS portal, there are still some that are yet to register.”
The government’s latest whip comes after small and medium enterprises began blaming non-payment by those companies that obtained supplies from them for their financial crunch. Because of the delay in payments, small firms are not able to meet their working capital requirements and at the same time banks’ risk aversion has led to drying up of funds. Finance minister Nirmala Sitharaman promised that the government would clear dues to vendors quickly as non-payment was pulling down economic growth to a multi-year low. In a bid to make these transactions more transparent, the government had introduced TReDS for electronic settling of routine dues in 2017. Micro and small businesses on the same portal can also access working credit against the transaction invoice from banks registered on the platform. According to the one of the CEOs of the three operating TReDS service providers, “majority of buyers register only for compliance purpose and without any intent to use the platform.” Several of these larg ..