Faster Payments, Stronger MSME: Government Mandates TReDS for Settlement of All MSME Invoices by Central Public Sector Enterprises

Mandatory settlement through TReDS: All operating Central Public Sector Enterprises (CPSEs) must route the settlement of invoices for goods and services procured from MSMEs through TReDS platforms authorised by the Reserve Bank of India (RBI). Transparency and accountability: Central Public Sector Enterprises (CPSEs) shall disclose details of MSME invoices routed and settled through TReDS as specified by the RBI and obtain a statutory auditor's certificate of TReDS registration and compliance during their annual audit.

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Quick Revision

Prelims-testable facts

01The Ministry of Micro, Small and Medium Enterprises has notified the mandatory use of Trade Receivables Discounting System (TReDS) by all operating Central Public Sector Enterprises (CPSEs) for the settlement of transactions with their MSME suppliers.
02All operating Central Public Sector Enterprises (CPSEs) must route the settlement of invoices for goods and services procured from MSMEs through TReDS platforms authorised by the Reserve Bank of India (RBI).
03Central Public Sector Enterprises (CPSEs) shall disclose details of MSME invoices routed and settled through TReDS as specified by the RBI.
04The mandate positions Central Public Sector Enterprises (CPSEs) as role models for timely payment discipline for large corporate buyers across the country.
05TReDS is a platform that provides collateral-free and without recourse to the seller financing on approved invoices, giving MSMEs working capital within a short span of time at competitive rates of interest.
06The notification came into effect on 30 June 2026, fulfilling the Union Budget 2026-27 commitment.
07Over 8.70 crore enterprises are registered on the Udyam Registration Portal and Udyam Assist Platform, providing employment to more than 38 crore persons.

Trap alerts

Most people think that TReDS is a new system introduced by the government, but actually it was already existing and being used for MSME payments.
Most people think that CPSEs are exempt from using TReDS, but actually all operating CPSEs must use TReDS for settlement of invoices with MSME suppliers.
Most people think that TReDS is only a payment gateway, but actually it provides collateral-free and without recourse to the seller financing on approved invoices.

Current-affairs link

The government has also introduced other schemes such as the Udyam Registration Portal and Udyam Assist Platform to support MSMEs, which have registered over 8.70 crore enterprises and provided employment to more than 38 crore persons.

Prelims Practice MCQs

Single facteasy

How many crore enterprises are registered on the Udyam Registration Portal and Udyam Assist Platform?

A.7.5 crore
B.8.70 crore
C.9.50 crore
D.10.20 crore

MSMEs are the backbone of the Indian economy, with over 8.70 crore enterprises registered.

Multiple statementsmedium

Consider the following statements regarding TReDS Platforms: 1. All TReDS platforms are owned by the Reserve Bank of India (RBI). 2. The RBI authorises all TReDS platforms for use by Central Public Sector Enterprises. 3. There are over 10,000 TReDS platforms authorised by the RBI. How many of the above statements are correct?

A.Only one
B.Only two
C.All three
D.None

Only statement 2 is supported by the text. The RBI authorises TReDS platforms, but it does not own them. Statement 1 is incorrect because the text mentions 'authorised by the Reserve Bank of India (RBI)', implying that the RBI has a role in authorising these platforms, not owning them. Statement 3 is incorrect as there is no information about the number of TReDS platforms authorised.

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