RBI Issues Draft Directions for Trade Receivables Discounting System

PR No. 2026-2027/48; Dated: 08.04.2026

The Reserve Bank of India (RBI) has issued draft directions for the ‘Trade Receivables Discounting System (TReDS)’, proposing a comprehensive regulatory framework for platforms facilitating financing of trade receivables.

1. What is TReDS?

A Trade Receivables Discounting System (TReDS) is:

• A digital/electronic platform
• Designed to facilitate financing of trade receivables
• Enables factoring of receivables through multiple financiers

This helps improve liquidity for businesses, especially MSMEs.

2. Objective of the Draft Directions

The framework aims to:

• Strengthen the digital infrastructure for receivables financing
• Promote efficient and transparent financing mechanisms
• Enhance access to credit for suppliers and MSMEs

3. Key Areas Covered in the Draft

3.1 Authorisation of TReDS Platforms

• Specifies eligibility and approval requirements
• Entities must obtain authorisation from RBI to operate TReDS

3.2 Capital Requirements

• Prescribes minimum capital norms
• Ensures financial stability and operational resilience of platforms

3.3 Governance Framework

Establishes standards for:

• • Management structure
  • Board oversight
  • Risk management practices

3.4 Scope of Activities

Defines permissible activities, including:

• • Uploading and acceptance of invoices
  • Bidding by financiers
  • Discounting and settlement processes

3.5 Reporting Requirements

• Mandates periodic reporting to RBI
• Ensures transparency and regulatory monitoring

4. Conclusion

The draft directions aim to create a robust, transparent, and well-governed ecosystem for receivables financing, strengthening TReDS as a key enabler of working capital access and financial inclusion.

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