 "CRISIL SME TRACKER, MSMEs, TReDS")
The Trade Receivables Discounting System (TReDS) proposed by the RBI is expected to provide much-needed liquidity to micro, small and medium enterprises (MSMEs). Lack of adequate working capital has been a major issue for MSMEs. Institutional lenders are typically obsessed with immovable collateral and credit history, which these units lack. On the other hand, the large and medium-sized corporates that these units supply tend to delay payments, often inordinately.
CRISIL’s analysis of about 10,000 MSMEs shows their average trade receivable position at about 75 days, which impedes their working capital cycle and crimps growth. One reason for this is that factoring
