RBI to ease MSME onboarding on instant financing platform TReDS

Mumbai: The Reserve Bank of India (RBI) on Wednesday proposed easing onboarding rules for small businesses on trade receivables discounting system (TReDS) platforms that provide instant working capital to these entities.

These RBI-regulated digital platforms enable micro, small and medium enterprises (MSMEs) to discount their trade receivables (invoices) and get instant working capital from lenders—banks and non-banks—without collateral. Primary TReDS platforms in India are RXIL (Receivables Exchange of India), M1xchange (Mynd Solutions) and Invoicemart.

“In order to promote ease of doing business for MSMEs and to encourage their greater participation on TReDS, it is proposed to dispense with the requirement of due diligence of MSMEs while onboarding on TReDS platforms,” governor Sanjay Malhotra announced as part of the statement on developmental and regulatory policies, released alongside the monetary policy statement.

Historically, the administrative heavylifting required to access formal credit has inadvertently locked out the smaller, transitionally digital enterprises that need it most. By lowering these entry barriers, the regulator is “unclogging the arteries of working capital”, Ketan Gaikwad, managing director and chief executive officer of RXIL told Mint. “This is a structural shift that transitions our smallest businesses away from the anxiety of unpredictable cash cycles and anchors them firmly within a formalized credit ecosystem.”

The central bank had introduced the TReDS framework in 2014, and later strengthened it in 2018. The fourth participant allowed on the exchanges were insurers; to insure the receivables/invoices. The other three are buyers, sellers and the lenders. TReDS platforms have collectively enabled invoice financing of over ₹8 trillion against 24 million invoices of over 200,000 MSMEs.

“This measure is expected to further increase trading volumes on the platform and offer liquidity to the sector. Banks and regulators would however need to identify risks inherent proactively on this front,” State Bank of India Group chief economic adviser Soumya Kanti Ghosh said in a research note.

Easy access to credit

The proposal was part of the draft master directions on revised norms for TReDS platforms, issued later on Wednesday.

RBI said MSMEs face constraints in obtaining adequate finance, particularly in terms of their ability to convert their trade receivables into liquid funds, because of which TReDS platforms were set up to facilitate financing of trade receivables of MSME sellers.

Extensive due diligence requirements for MSME sellers have acted as a key friction point, particularly for smaller enterprises that may lack comprehensive documentation or the digital readiness to complete KYC processes seamlessly. This has led to limited penetration of TReDS platforms, with less than 1% of India’s registered MSMEs on-boarded to date, said Prakash Sankaran, managing director and chief executive officer, Invoicemart.

Under the TReDS framework, financing is primarily underwritten based on the buyer’s creditworthiness, making seller KYC largely procedural especially as funds are disbursed into already KYC-compliant bank accounts. “This shift does not dilute credit discipline, as transactions remain anchored to approved invoices and buyer risk profiles,” he said, adding that by easing these barriers, RBI is enabling faster onboarding and broader participation.

The draft, which is open for public feedback till 1 May, 2026, aims to rationalize existing guidelines for such platforms, streamline capital requirements with those of other regulated entities, simplify onboarding process for MSME sellers, and permit financiers to avail credit guarantee cover for exposures undertaken on TReDS.

“The relaxation in TReDS onboarding norms is a timely measure that will accelerate receivables financing for MSMEs, a segment that contributes nearly 30% to GDP,” said Shilpa Bhatter, chief financial officer of UGRO Capital, MSME-lending focussed non-bank lender.

The central bank also reiterated the minimum net worth requirement of ₹25 crore to be certified as a TReDS platform, saying that existing entities must ensure compliance latest by 31 March, 2027. The minimum net worth must be maintained on an ongoing basis.

The TReDS platform has not seen much of an uptick in transaction volumes due to several challenges, including lack of digitization among MSMEs and market fragmentation. The central bank and the government have been taking measures to promote the use of such platforms to enhance credit access to MSMEs.

In the Union budget for FY27, finance minister Nirmala Sitharaman had proposed mandating TReDS as the default transaction settlement platform for all purchases made from MSMEs by central public sector enterprises (CPSEs).

“To leverage its (TreDS) full potential, I propose...to mandate TReDS as the transaction settlement platform for all purchases from MSMEs by CPSEs, serving as a benchmark for other corporates,” Sitharaman had said while presenting the budget.