Govt mandates TReDS for settlement of all MSME invoices by CPSEs; reduces payment delays
New Delhi, July 10
The Central government has made it mandatory for all operating Central Public Sector Enterprises to route settlement of invoices for goods and services procured from Micro, Small and Medium Enterprises through TReDS platforms authorised by the Reserve Bank of India, an official statement said on Friday.
The notification requires CPSEs to disclose details of MSME invoices routed and settled through TReDS as specified by the RBI and to obtain a statutory auditor's certificate of TReDS registration and compliance during their annual audit.
The move is intended to position Central Public Sector Enterprises (CPSEs) as role models for timely payment discipline for large corporate buyers across the country.
The move will also help end long payment delays faced by MSMEs and provide them working capital within a short span of time at competitive rates of interest.
With every CPSE invoice flowing through TReDS, MSME suppliers can convert approved invoices into cash well before the due date. Further, financing on TReDS is collateral-free and without recourse to the seller, with banks and NBFCs bidding competitively to discount invoices.
"By making TReDS the settlement route for all CPSE purchases from MSME, public sector procurement will now work actively for the small supplier: procurement by CPSEs gets captured on TReDS, and timely payment to MSME will be ensured through invoice financing from banks and financial institutions," the statement noted.
The notification, issued on June 30, 2026, gives effect to a key announcement of the Union Budget 2026-27.
MSMEs function as the backbone of the Indian economy, with over 8.70 crore enterprises registered on the Udyam portals, and employ over 38 crore persons.
TReDS is an RBI-regulated electronic platform, operational since 2017, for financing and discounting the trade receivables of MSMEs due from corporate buyers, government departments and public sector undertakings, through competitive bidding by multiple financiers.
— IANS
Reader Comments
Good step but will the smaller MSMEs in villages know how to use TReDS? Many of them are still doing manual invoices. Government should have a awareness campaign in regional languages too. Technology is fine but ground-level implementation needs hand-holding.
This is brilliant! MSMEs are the real backbone - 38 crore employees! Just imagine the working capital crunch they face daily. Making it mandatory and requiring auditor certification means there's accountability. Hope this sets a precedent for private sector too. Ab to private companies bhi follow karein! 🇮🇳
As someone who works in a bank that bids on TReDS, this will increase the volume of invoices on the platform. More volume means more competition among banks and NBFCs, which will bring down discounting rates. Great news for MSME suppliers who get cheaper working capital. Win-win!
Interesting policy. In Canada, we have similar practices but it's more voluntary. Making it mandatory for government enterprises is a strong signal. However, I wonder about the cost of auditor certification for small MSMEs. Hope the government offsets that.
Finally a pro-MSME move! I run a small textile unit in Tirupur and TReDS has been a lifesaver for some of my invoices. But only when buyers voluntarily used it. Making it compulsory for CPSEs is exactly what was needed. Collateral-free financing through competitive bidding is a huge relief. No more running to local moneylenders! 🎉
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