RBI simplifies MSME onboarding on TReDS, removes due diligence norm

RBI proposes removing due diligence requirement for MSMEs on TReDS platform to improve access to working capital and encourage wider participation

The Reserve Bank of India (RBI) on Wednesday proposed to dispense with the requirement of due diligence of MSMEs while onboarding on the Trade Receivables Discounting System (TReDS) platform, to promote ease of doing business and encourage greater participation.

 

In the monetary policy, with a view to facilitating timely access to working capital for MSMEs, guidelines for TReDS were issued in 2014 and subsequently updated in 2018. The scope of TReDS was further expanded in 2023 with the inclusion of insurance companies as the fourth participant. In order to promote ease of doing business for MSMEs and to encourage their greater participation on TReDS, it is proposed to dispense with the requirement of due diligence of MSMEs while onboarding on TReDS platforms.

 

 

"A comprehensive review of other extant instructions has also been undertaken, and draft directions will be issued shortly for public consultation," RBI said.