TReDS - A Solution to MSMEs Liquidity Issues?

Abstract

Micro, small and medium enterprises (MSMEs) in India contribute significantly towards the country’s gross domestic product (GDP), manufacturing output and exports. They have a significant share in creating employment within the country. Out of the several challenges they face, one is regarding liquid cash. MSMEs often ail and fail due to cash crunch. With a view to address this issue, the Reserve Bank of India launched the electronic platform called Trade Receivables Discounting System (TReDS) in 2014. This platform has continued to evolve with changing times. The platform has been of some benefit to MSMEs that sell to large corporate, public sector undertakings and Government Departments by helping the seller MSMEs get paid in a timely manner. Despite steps taken by the RBI and the Central Government to have more registrants within the TReDS platform, there remains more to be done in order to attain increased participations on this platform.