The Reserve Bank of India (RBI) has proposed simplifying onboarding requirements for MSMEs on Trade Receivables Discounting System (TReDS) platforms to enhance access to working capital financing. The proposal includes removal of certain due diligence requirements at the onboarding stage, aimed at improving ease of participation.
This move seeks to address key adoption barriers such as procedural complexities, onboarding delays, and limited participation. Despite the benefits of collateral-free invoice discounting, TReDS penetration among MSMEs remains low, indicating the need for such regulatory support.
By easing norms, the RBI aims to accelerate MSME onboarding, improve liquidity access, and reduce receivable cycles, enabling more efficient cash flow management for small businesses.
Further, with TReDS interoperability, MSMEs can upload invoices on one platform and access financing across multiple platforms, leading to better price discovery and increased competition among financiers.
Overall, this proposal is expected to strengthen the digital trade finance ecosystem, drive higher transaction volumes, and support formalisation of MSME credit, reinforcing RBI’s focus on inclusive and efficient financing frameworks.