Eight public sector banks, five PSUs and 34 private firms have come on board the TReDS platform, a mechanism that was formed to promote labour- intensive MSME sector, a top official said today.
Announced along with the unprecedented Rs 2.11 lakh crore capital support for banks two months ago, TReDS is an online mechanism for facilitating the financing of trade receivables of MSMEs through multiple financiers.
It aims at improving the finances of MSMEs by shortening the cash cycle through a structured bill discounting framework with participation of all the stakeholders, Financial Services Secretary Rajiv Kumar told PTI.
The Trade Receivables electronic Discount System (TReDS) also enables discounting of invoices of exchange of MSME sellers against large corporate.
It also takes care of the cash crunch for the very important segment of the economy that is the focus of the government, Kumar said.
The MSME sector contributes 40 per cent to the manufacturing sector and 45 per cent of the exports.
Kumar said public sector companies like Shipping Corporation of India, Kudremukh Iron Ore Company Ltd and Bharat Electronics Ltd have onboarded the platform while companies like Bhel, Hindustan Aeronautics Ltd, NALCO, IRCON, Goa Shipyard among others are in the process of joining.
Other public sector lenders are Indian Overseas Bank, Dena Bank, Union Bank of India and Oriental Bank of Commerce.
As soon as goods are delivered by a vendor, ususally an MSME to a large firm, the system generates a bill. Based on the bill, the vendor can get working capital from banks at a discounted rate instantly. Currently, bill payment takes 90 days to a year, choking the fund flow of the micro, small and medium enterprises (MSMEs).
Besides, Kumar said, the udyamimitra portal will help bring in a culture of competitiveness among banks to finance MSME projects.
"If you have a good project, you don't have to keep running after banks, they can compete and a good rating project would attract a better, competitive rate," he said.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)