The Reserve Bank of India has finalised and issued the Trade Receivables Discounting System (TReDS) Directions, 2026 that allow financiers to obtain guarantees for factoring units from any credit guarantee fund trust set up by the government. According to Business Standard, the RBI had placed the draft Reserve Bank of India (Trade Receivables Discounting System) Directions, 2026 on April 08, 2026, in the public domain for stakeholder feedback. The central bank stated that feedback from the public has been examined and suitably incorporated in the final directions, following the release of a draft framework in April seeking industry comments. The RBI has comprehensively reviewed existing instructions governing TReDS and decided to consolidate them into a single framework, as reported by Business Standard. The final directions prescribe the appropriate requirements for an efficient functioning of TReDS while providing the authorised entities flexibility to frame operational and procedural guidelines in accordance with the extant regulatory framework. These directions shall come into effect immediately, unless indicated otherwise.
The RBI has established a minimum net worth requirement of ₹25 crore for TReDS platform applicants, as reported by Business Standard. The Reserve Bank of India (Trade Receivables Discounting System) Directions, 2026 specify that applicants must submit a certificate from their statutory auditor in the prescribed format. Existing authorised entities must ensure this net worth criterion is met by March 31, 2028, with the minimum net worth requirement to be maintained on an ongoing basis. The central bank has retained this ₹25 crore threshold as part of the revised framework, which aims to make the system more efficient while reducing compliance burdens. The directions also align the minimum net-worth requirement for TReDS operators with that applicable to other non-bank payment system operators. The RBI has retained the minimum net-worth requirement for TReDS operators at ₹25 crore and given existing platforms until March 31, 2028, to comply with the revised capital norms.
The Reserve Bank of India has issued final directions on Trade Receivables Discounting System (TReDS) platforms that allow financiers to obtain guarantees for factoring units from any credit guarantee fund trust set up by the government. According to The Economic Times, this move aims to reduce credit risk, boost lender participation, and improve liquidity in the receivables financing ecosystem. The revised framework formally recognises such guarantee trusts as participants on TReDS platforms, with the directions effective immediately from Monday. The central bank stated that feedback from the public has been examined and suitably incorporated in the final directions, following the release of a draft framework in April seeking industry comments. The RBI has comprehensively reviewed existing instructions governing TReDS and decided to consolidate them into a single framework, as reported by Business Standard. The availability of guarantee cover is expected to reduce the credit risk faced by financiers, particularly in transactions involving smaller borrowers and buyers with limited credit histories. Lower risks could encourage more banks and financial institutions to participate in receivables financing and expand the flow of credit to MSMEs.
According to the RBI directives reported by The Economic Times, TReDS platforms must facilitate the uploading, bidding, discounting, and settlement of invoices for MSME sellers. The system should establish mechanisms to verify the genuineness of uploaded invoices and bills. The revised framework introduces further discounting and re-discounting of receivables financed on TReDS, allowing financiers to transfer discounted factoring units to other eligible financiers in accordance with applicable regulations. This development could help improve liquidity and facilitate the development of a secondary market for receivables financing. The new guidelines require platforms to validate that sellers are genuine MSMEs and ensure funds are credited directly to their bank accounts. Under the new framework, insurance companies and government-notified credit guarantee funds are permitted to participate on TReDS platforms. The RBI has formally permitted further discounting and re-discounting of receivables financed through TReDS, which will allow financiers to transfer discounted factoring units to other eligible financiers in line with existing regulations.
As reported by The Economic Times, MSMEs face significant constraints in obtaining adequate finance, particularly in converting trade receivables into liquid funds. The RBI has been authorising TReDS platforms over time to facilitate financing of trade receivables for MSME sellers. The revised framework strengthens the legal enforceability of transactions undertaken on TReDS, with the central bank stating that once a buyer accepts a factoring unit on the platform, the obligation to make payment on the due date becomes unconditional, with no scope for set-offs relating to disputes over quality of goods or services. To strengthen transparency and reduce financing risks, TReDS platforms have been directed to ensure registration of receivable assignments with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI). TReDS operators must implement "necessary validation mechanisms" to ensure that a seller qualifies as an MSME and that funds due to the seller are credited only to the seller's bank account. The latest reforms are aimed at making invoice financing more efficient, reducing risks for lenders and improving access to working capital for small businesses.
According to The Economic Times, the revised framework allows financiers to obtain insurance cover for TReDS transactions, provided the insurance premium is not borne by the MSME seller. However, such credit insurance cannot be treated as a credit risk mitigant for availing prudential regulatory benefits. The RBI has clarified that the cost of insurance cannot be passed on to MSME sellers and that such insurance cannot be treated as a credit risk mitigant for availing prudential regulatory benefits. The directions also streamline onboarding requirements for MSME sellers and align capital requirements for platform operators with those applicable to other non-bank payment system operators. To ensure proper functioning, platforms must put in place validation mechanisms to verify MSME status and ensure that funds are credited directly to the seller's bank account. The framework now includes insurance companies as a fourth participant to insure trade invoices against default.
According to RBI data reported by The Hindu BusinessLine, there are currently five TReDS platforms operating in the market - A.TReDS, Receivables Exchange of India, Mynd Solutions, C2FO Factoring Solutions and KredX Platform. These platforms collectively financed 1,40,972 invoices worth ₹29,869 crore in April 2026. The move is aimed at improving ease of doing business for MSMEs and encouraging greater participation on TReDS, as reported by The Hindu BusinessLine. The platform brings together various participants for uploading, accepting, bidding, discounting and settling invoices and bills, thereby enhancing liquidity for MSMEs through timely access to working capital at competitive rates. By allowing guarantee cover and creating a more robust framework for receivables financing, the RBI is seeking to deepen the TReDS ecosystem and strengthen credit flow to India's MSME sector.
