Recently RXIL (Receivables Exchange of India) has become the first TReDS platform to cross monthly throughput of Rupees 1000 crores. The transaction volume in the platform grew from Rupees 69 crores in April 2020 to Rupees 1,105 crores in March 2021. This shows economic recovery in the country. Also, it shows that the MSME sector that was badly hit during COVID-19 is getting revived.

Receivables Exchange of India

  • It was incorporated in the year 2016.
  • RXIL is a joint venture between Small Industries Development Bank of India and National Stock Exchange of India Limited.
  • It operates TReDS.
  • It was the first entity to receive approval from Central bank RBI to launch the first TreDS Exchange of India.
  • RXIL is an integrated provider of financial platform that supports growth and development of MSMEs.

TReDS

  • TReDS is an electronic platform that facilitates financing of MSMEs through multiple financiers.
  • The main 3 participants in the TreDS are MSMEs (sellers), financiers and Corporate entities (buyers).
  • According to Central bank, only MSMEs can participate as sellers in TReDS.
  • In the year 2015, Central Bank granted approval for SIDBI and NSICL to set up and operate TReDS.
  • It can help the MSMEs unlock their working capital.
  • It ensures higher efficiency and capital management.

How does TReDS work?

The seller first uploads an invoice. This invoice waits for an acceptance from a buyer. After the buyer accepts the invoice, it goes for auction. The financiers enter discounting rates. The party bearing the interest cost will accept the best bid. Later the financier account is debited and seller account is credited.

Legality of TReDS

The Reserve Bank of India granted permission for the operation of TReDS in the country based on the guidelines under Payment and Settlement System Act of 2007.