TReDS for MSMEs: how invoice discounting on the RBI-authorised platforms works

What is TReDS?

TReDS is short for Trade Receivables Discounting System. RBI describes it as an electronic platform for financing or discounting the trade receivables of MSMEs (RBI FAQ on TReDS). In plain words, you sell an invoice your buyer has already accepted, and a bank or other financier pays you before the buyer's due date.

Three rules make it different from an ordinary loan:

• Only MSMEs can sell on it. Buyers can be companies, government departments, public sector undertakings and any other entity (RBI FAQ on TReDS).
• It is without recourse to you. RBI says TReDS transactions are "without recourse" to the MSME. If the buyer does not pay, the financier cannot come back to you for the money (RBI FAQ on TReDS).
• Many financiers bid. Banks, NBFC-Factors (non-banking finance companies registered as factors) and other institutions RBI permits take part as financiers, and they bid for your invoice (RBI FAQ on TReDS).

The five RBI-authorised TReDS platforms

A TReDS platform needs RBI authorisation under the Payment and Settlement Systems Act, 2007 (RBI FAQ on TReDS). RBI's list of authorised payment system operators names five TReDS operators (RBI payment system operators list).

Fees, onboarding steps and the financiers active on each platform differ. Each platform publishes its own. Check the RBI list before you sign up anywhere, because a platform that is not on it is not a TReDS.

How an MSME discounts an invoice on TReDS

On TReDS an invoice or bill of exchange is called a factoring unit (RBI FAQ on TReDS). RBI sets out the flow in this order (RBI FAQ on TReDS):

1. The factoring unit is created on the platform, by the seller or the buyer.
2. The other side accepts it. If you upload it, your buyer accepts it on the platform.
3. Financiers bid on the accepted factoring unit.
4. The best bid is chosen, by the seller or the buyer, as the case may be.
5. The financier pays the discounted amount.
6. The buyer pays the financier on the due date.

Bidding starts only after the counterparty accepts the factoring unit (RBI FAQ on TReDS). An invoice your buyer has not accepted on the platform cannot be discounted there.

Which buyers must be on TReDS

• Large companies and central public sector enterprises. The Ministry of MSME's notification of 07-Nov-2024 requires every company under the Companies Act, 2013 with turnover above ₹2,50,00,00,000, and every central public sector enterprise, to onboard on TReDS (Ministry of MSME on X).
• Central public sector enterprises must settle through TReDS. The MSMED (Amendment) Bill, 2026, passed by Parliament on 07-Aug-2026, requires every central public sector enterprise to settle invoices for goods and services bought from MSMEs through TReDS. States may ask their own public sector enterprises to do the same (PIB press release, 07-Aug-2026).

The amendment takes effect from dates the Central Government notifies (MSMED (Amendment) Bill, 2026, as introduced). We found no notice of the start date as of 03-Oct-2026. The 45-day payment rule guide tracks it.

TReDS in numbers

What changed in 2026

The Union Budget 2026-27 proposed four measures for TReDS (Union Budget speech):

• TReDS as the settlement platform for all purchases from MSMEs by central public sector enterprises.
• A CGTMSE credit guarantee for invoice discounting on TReDS.
• A link between GeM (the Government e-Marketplace) and TReDS, so financiers can see government purchases from MSMEs.
• TReDS receivables as asset-backed securities, to build a secondary market.

The guarantee is now in force. Since 15-Jun-2026, CGTMSE covers invoices on TReDS where both buyer and seller are micro or small enterprises, with 75% cover and a ceiling of ₹2,00,00,000 per seller (CGTMSE circular 262). See the CGTMSE guide.

TReDS and the 45-day payment rule

Under the MSMED Act, a buyer must pay a micro or small supplier within the agreed period, which can never be more than 45 days from acceptance (MSMED Act, 2006). TReDS does not change that duty. It gives you a way to get paid early on an accepted invoice. If a buyer pays late and will not settle, the route is MSME Samadhaan, which sends the case to the state's Micro and Small Enterprises Facilitation Council (MSME Samadhaan portal).

TReDS compared with other invoice finance

The factoring guide explains recourse and non-recourse factoring outside TReDS. Read the contract before you sign either.

Your next step

If buyers pay you late, TReDS is one route and a working capital limit is another. Run the free loan readiness check to see how a lender may read your file. Then compare invoice and bill discounting and the working capital guide.