RBI unveils final TReDS framework, allows credit guarantees and mandates ₹25 crore net worth for operators

The Reserve Bank of India (RBI) has issued the final directions governing Trade Receivables Discounting System (TReDS) platforms, introducing a revised regulatory framework aimed at expanding access to working capital for micro, small and medium enterprises (MSMEs) while strengthening safeguards for financiers and platform operators.

The updated norms, which come into force immediately, seek to simplify participation on TReDS platforms, improve operational efficiency and encourage greater financing of MSME trade receivables. The central bank has also permitted financiers to avail themselves of credit guarantee arrangements for eligible exposures, a move expected to improve credit flow to the sector.

Higher capital threshold for TReDS operators

Under the new framework, entities seeking authorisation to operate a TReDS platform will be required to maintain a minimum net worth of ₹25 crore.

“An applicant shall have a minimum net worth of ₹25 crore and shall submit a certificate in the format from its statutory auditor,” the RBI said in the Reserve Bank of India (Trade Receivables Discounting System) Directions, 2026.

Existing TReDS operators have been given until March 31, 2028, to comply with the revised requirement. The RBI has also stipulated that the minimum net worth must be maintained on an ongoing basis.

The move is aimed at ensuring that platform operators possess adequate financial strength as transaction volumes and participant numbers continue to grow.

Credit guarantee support, stronger verification norms

A key feature of the revised framework is the provision allowing financiers to obtain credit guarantee cover for financed trade receivables.

“A financier may avail of a credit guarantee arrangement in respect of financed trade receivables, subject to applicable laws and regulations,” the RBI said.

Industry participants believe the provision could encourage banks and non-banking finance companies to increase their exposure to MSME receivables by mitigating part of the underlying credit risk.

The central bank has also placed greater emphasis on invoice authentication. “The platform should put in place a suitable mechanism to establish the genuineness of the uploaded invoices/bills,” the directions said.

The requirement is intended to strengthen trust in the ecosystem and reduce the possibility of duplicate financing or fraudulent transactions.

Focus on seamless settlement and MSME liquidity

According to the RBI, TReDS platforms must facilitate the complete lifecycle of invoice financing, including uploading, bidding, discounting and settlement of trade receivables.

“The platform shall facilitate efficient and seamless settlement of transactions between financier and seller for financing of trade receivables and between buyer and financier on the due date, using any authorised payment system,” the regulator said.

TReDS functions as an electronic marketplace where MSMEs can convert approved invoices into immediate cash by auctioning receivables to banks and other eligible financiers. The mechanism was introduced to address one of the sector's most persistent challenges—delayed payments from buyers and large corporates.

According to RBI, the latest directions consolidate and update the regulatory framework governing TReDS platforms as policymakers seek to improve formal credit access for small businesses.