India's First
Trade
Receivables
Discounting
System
Catalyst for Growth
Efficient Cash Management
Cost Reduction
System Driven and Transparent
Unlock your Receivables!
Receivables Exchange of India Limited (RXIL) is promoted by National
Stock Exchange of India Limited (NSE), the premier stock exchange in
India and Small Industries Development Bank of India (SIDBI), the apex
financial institution for promotion and financing of MSMEs in India. RXIL
will operate the TReDS platform as per TReDS guidelines issued by RBI.
India's First
Trade
Receivables
Discounting
System
SIDBI brought in its expertise spanning more than two decades on the subject of MSME
finance and factoring operations. TReDS initiative is the continuum of series of SIDBI's efforts
in addressing the gaps in the MSME ecosystem. SIDBI way back in early nineties piloted the
Receivable Finance Scheme [RFS] in reverse factoring process in India for addressing the
delayed payments problem of MSMEs. SIDBI, through the Scheme has demonstrated how
credit profile of large corporates could be leveraged for bringing down the cost of financing
of receivables of MSMEs with more than 23000 registered MSME beneficiaries.
NSE has always been on the forefront of innovation and has played a catalytic role in
reforming the Indian capital markets. As an exchange, NSE has been focussing on the
growth of SMEs in India by setting up EMERGE for listing of SMEs. NSE brings technical
expertise in managing exchange operations to commence the TReDS platform successfully.
RXIL is the first entity to receive the approval from Reserve Bank of India (RBI) to launch India's
First TReDS Exchange. The web based TReDS platform of RXIL can be accessed by using the link
www.treds.in.
Stakeholders
◾ National Stock Exchange of
India Limited (Promoter)
◾ Small Industries Development
Bank of India (Promoter)
◾ State Bank of India
◾ SBI Capital Markets Limited
◾ ICICI Bank Limited
◾ ICICI Securities Limited
◾ YES Bank Limited
What is TReDS?
Role of MSMEs
Trade Receivables Discounting Systems
(TReDS) is an automated system driven
platform set up to benefit MSMEs. It will
enable them to auction their trade receivables
at competitive market interest rates through a
transparent bidding process in which multiple
financiers will participate.
Role of micro, small and medium enterprises (MSMEs)
in the economic and social development of any
country has been globally validated. In India MSMEs
are a thrust segment attending to national objectives of
providing employment to local population, enterprise
development and inclusive growth with equity.
The main objective of the TReDS platform is to address
the critical needs of MSMEs i.e. the twin issues of
promptly en-cashing receivables and eliminating credit
risk. TReDS platform of RXIL is expected to be a catalyst
in the growth of MSMEs by bringing in transparency in
the business eco-system.
While MSMEs are resilient and adaptive to challenges,
their inability to convert their trade receivables
promptly into liquid funds restricts their growth
potential. In order to step up efforts to address this
issue in a more efficient way, RBI has taken steps to
establish TReDS Platform for financing trade
receivables of MSMEs.
Eligible Participants
The eligible entities who can participate on the TReDS platform are:
Corporates and other buyers
including Government
Departments and
Public Sector Undertakings and
such other entities as
may be permitted by RBI
Sellers
Buyers
MSME entities as per the definition
of the Micro, Small and Medium
Enterprises Development Act,
2006 (MSMED Act)
Financiers
Banks, NBFC Factors, Financial
Institutions and such other
institutions as may be permitted by
RBI from time to time
Eligibility Criteria for MSMEs
The eligibility criteria for MSMEs to join the TReDS platform as Sellers is given below:
Manufacturing Sector
(Investment in Plant and Machinery)
Service Sector
(Investment in Equipment)
Micro
Does not exceed Rs. 25 Lakh
Does not exceed Rs. 10 Lakh
Small
More than Rs. 25 Lakh but does not
exceed Rs. 5 Crore
More than Rs. 10 Lakh but does not
exceed Rs. 2 Crore
Medium
More than Rs. 5 Crore but does not exceed
exceed Rs. 10 Crore
More than Rs. 2 Crore but does not
Rs. 5 Crore
Registration Process
The registration process is simple as outlined below:
◾ Create a temporary User ID
◾ Fill online application and upload the required documents (including KYC documents)
◾ Submit signed application form along with Master Agreement and other documents to RXIL
◾ RXIL verifies the application submitted for registration
◾ Payment of Registration Fee
◾ Approval of application submitted for registration
Who can initiate TReDS transactions?
Both the Seller and the Buyer can initiate TReDS transactions for financing of trade receivables of MSME Sellers.
When the MSME Seller uploads the invoices and bears the interest cost it is termed as “Factoring” i.e. (Single Seller –
Multiple Buyers). In case of “Reverse Factoring” (Single Buyer – Multiple Sellers), the Buyer initiates the transaction
and the interest cost is also borne by the Buyer.
How it works?
Register with RXIL &
execute Master Agreement
Onboarding
Entity
Creation
Establish Buyer-Seller Relationship
Financier defines limit on buyer
Factoring
Unit (FU)
Prerequisites
Financiers (with defined limits on
buyers) bid on invoices
Auction
Bid
Offerings
Debit Financier & Credit Seller
Register FU with CERSAI
Settlement
Leg1
(T+1)
RXIL undertakes
verification and due diligence
Onboarding
Fees
Verification
Seller/Buyer uploads the
invoice on the TReDS platform
Counterparty accepts invoice
Invoice converted to Factoring Unit
Upload of
Invoice
Cost bearer accepts the
best bid in the auction
Bid
Acceptance
Debit to Buyer & Credit to Financier
Satisfaction FU from CERSAI
Leg2
(Due Date)
Entity pays
Registration Fees
Acceptance
RXIL generates Leg1 obligation
- Financier to Seller
Obligation
Unfinanced or Failed
Leg3 settled between Buyer
and Seller
Leg 3
TReDS is the first attempt in India to introduce factoring without recourse
to the seller and will help MSME Sellers, not only in quick realisation of
receivables but also efficient price discovery.
Key Benefits – All Participants
◾ Automated transparent platform
◾ Paperless and hassle free
◾ Cost Reduction
Benefits to Sellers
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Competitive price discovery
Without recourse to Seller
MSMEs have the right to choose the best bid
Payment received on T+1 on successful auction
No follow-up with the buyers for payment
Not dependent on single financier
Enhanced productivity and efficient liquidity management
Widening the financing options
Benefits to Buyers
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Compliant with MSMED Act, 2006
Can negotiate better terms with MSME Vendors
Lower cost of inputs for Buyers
Lower administrative cost
Can avail extended credit period
Competitive Price Discovery
Efficient cash-flow management
Ensure that their vendors are not strapped for cash / working capital
Benefits to Financiers
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Banks are eligible for Priority Sector Lending (PSL) benefits
Financiers can rely on KYC of TReDS platform
Acquire new customers at lower cost
Reduce operational cost
National Stock Exchange of India Limited (NSE)
NSE is the leading stock exchange in India and the fourth largest in the world by equity trading
volume in 2015, according to WFE. India Index Services & Products Limited (IISL), a wholly
owned subsidiary of NSE, developed, owns and manages the NIFTY 50 index, a leading
benchmark for the Indian capital markets. NSE offers comprehensive coverage of the Indian
capital markets across asset classes, including equity, fixed income and derivative securities.
NSE has a fully-integrated business model comprising exchange listings, trading services,
clearing and settlement services, indices, market data feeds, technology solutions and
financial education offerings. For more information, please visit www.nseindia.in
Small Industries Development Bank of India (SIDBI)
Small Industries Development Bank of India (SIDBI), set up on April 2, 1990 under an Act of
Indian Parliament, is the Principal Financial Institution for the Promotion, Financing and
Development of Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of
the functions of the institutions engaged in similar activities. It has pioneered products in niche
segments not conventionally addressed by the formal banking sector viz., Risk Capital, Energy
Efficiency Products for MSMEs etc. besides Receivable Finance Scheme by pioneering of bill
discounting facilities. For more information please visit www.sidbi.in
Contact
Receivables Exchange of India Ltd. (An NSE – SIDBI JV)
Exchange Plaza, Plot C-1, G Block
Bandra Kurla Complex
Bandra (East)
Mumbai - 400051
Toll Free No: 1-800-2668733 (1-800-266-TRED)
E-mail: [email protected]
Portal: www.TReDS.in
Website: rxil.in