The Reserve Bank of India has issued the Reserve Bank of India Trade Receivables Discounting System Directions, 2026, creating a master direction for Trade Receivables Discounting System (TReDS) platforms after a comprehensive review of the existing framework. The direction takes effect immediately and is intended to rationalise and harmonise the rules for authorised TReDS operators. Key changes include streamlined capital requirements aligned with other non-bank payment system operators, a simplified onboarding process for micro, small and medium enterprise sellers, and permission for financiers to obtain credit guarantee cover for TReDS exposures. Under the new framework, applicants to operate a TReDS platform must have a minimum net worth of INR 25 crore, while existing authorised entities must meet that threshold by March 31, 2028 and maintain it on an ongoing basis. The direction sets conduct requirements for platform operators, including validating the genuineness of uploaded invoices or bills, carrying out customer due diligence on buyers, ensuring sellers are MSMEs, and crediting funds only to the seller's bank account. Participation agreements must include the buyer's unconditional payment obligation once a factoring unit is accepted, a seller declaration that the receivable has not already been financed or charged elsewhere, and filing of the receivables assignment with the central registry CERSAI. TReDS platforms may also facilitate re-discounting by financiers subject to applicable Reserve Bank of India instructions. Financing remains without recourse to sellers, and buyer default is not the responsibility of the platform. Financiers may use insurance for TReDS transactions provided the premium is not charged to sellers, but such credit insurance cannot be treated as a credit risk mitigant for prudential purposes. The master direction repeals the 2014 TReDS guidelines, as updated through July 2, 2018, and the June 7, 2023 circular that expanded the scope of TReDS, while preserving existing authorisations, approvals and actions taken under the earlier framework. Authorised TReDS entities must continue to report to the Reserve Bank of India through annual net-worth and system audit submissions, monthly TReDS statistics, and notices of changes in board directors.
Reserve Bank of India2026-06-23
Reserve Bank of India issues TReDS master direction simplifying MSME onboarding and setting INR 25 crore net worth
The Reserve Bank of India has issued a master direction for Trade Receivables Discounting System platforms, replacing earlier TReDS guidance after reviewing the framework. It sets a minimum net worth of INR 25 crore, simplifies MSME seller onboarding, and allows financiers to obtain credit guarantee cover for TReDS exposures. The direction is effective immediately, with existing operators required to meet the net-worth threshold by March 31, 2028.