India's First

Trade
Receivables
Discounting
System

Catalyst for Growth Efficient Cash Management

Cost Reduction System Driven and Transparent

Unlock your Receivables!

 Receivables Exchange of India Limited (RXIL) is promoted by National
Stock Exchange of India Limited (NSE), the premier stock exchange in
India and Small Industries Development Bank of India (SIDBI), the apex
financial institution for promotion and financing of MSMEs in India. RXIL
will operate the TReDS platform as per TReDS guidelines issued by RBI.
SIDBI brought in its expertise spanning more than two decades on the subject of MSME
finance and factoring operations. TReDS initiative is the continuum of series of SIDBI's efforts
in addressing the gaps in the MSME ecosystem. SIDBI way back in early nineties piloted the
India's First Receivable Finance Scheme [RFS] in reverse factoring process in India for addressing the
delayed payments problem of MSMEs. SIDBI, through the Scheme has demonstrated how
Trade credit profile of large corporates could be leveraged for bringing down the cost of financing
Receivables of receivables of MSMEs with more than 23000 registered MSME beneficiaries.

Discounting NSE has always been on the forefront of innovation and has played a catalytic role in
reforming the Indian capital markets. As an exchange, NSE has been focussing on the
System growth of SMEs in India by setting up EMERGE for listing of SMEs. NSE brings technical
expertise in managing exchange operations to commence the TReDS platform successfully.

RXIL is the first entity to receive the approval from Reserve Bank of India (RBI) to launch India's
First TReDS Exchange. The web based TReDS platform of RXIL can be accessed by using the link
www.treds.in.

Stakeholders

◾ National Stock Exchange of

India Limited (Promoter)
◾ Small Industries Development
Bank of India (Promoter)
◾ State Bank of India
◾ SBI Capital Markets Limited
◾ ICICI Bank Limited
◾ ICICI Securities Limited
◾ YES Bank Limited

What is TReDS? Role of MSMEs

Trade Receivables Discounting Systems
(TReDS) is an automated system driven
platform set up to benefit MSMEs. It will
enable them to auction their trade receivables
at competitive market interest rates through a
transparent bidding process in which multiple
financiers will participate.
The main objective of the TReDS platform is to address
the critical needs of MSMEs i.e. the twin issues of
promptly en-cashing receivables and eliminating credit
risk. TReDS platform of RXIL is expected to be a catalyst
in the growth of MSMEs by bringing in transparency in
the business eco-system.
Role of micro, small and medium enterprises (MSMEs)
in the economic and social development of any
country has been globally validated. In India MSMEs
are a thrust segment attending to national objectives of
providing employment to local population, enterprise
development and inclusive growth with equity.
While MSMEs are resilient and adaptive to challenges,
their inability to convert their trade receivables
promptly into liquid funds restricts their growth
potential. In order to step up efforts to address this
issue in a more efficient way, RBI has taken steps to
establish TReDS Platform for financing trade
receivables of MSMEs.
Eligible Participants

The eligible entities who can participate on the TReDS platform are:

MSME entities as per the definition

of the Micro, Small and Medium
Sellers Enterprises Development Act,
Corporates and other buyers 2006 (MSMED Act)
including Government
Departments and
Public Sector Undertakings and
such other entities as
Financiers
may be permitted by RBI Buyers

Banks, NBFC Factors, Financial

Institutions and such other
institutions as may be permitted by
RBI from time to time

Eligibility Criteria for MSMEs

The eligibility criteria for MSMEs to join the TReDS platform as Sellers is given below:

Manufacturing Sector Service Sector

(Investment in Plant and Machinery) (Investment in Equipment)

Micro Does not exceed Rs. 25 Lakh Does not exceed Rs. 10 Lakh

Small More than Rs. 25 Lakh but does not More than Rs. 10 Lakh but does not
exceed Rs. 5 Crore exceed Rs. 2 Crore

Medium More than Rs. 5 Crore but does not exceed More than Rs. 2 Crore but does not
exceed Rs. 10 Crore Rs. 5 Crore

Registration Process

The registration process is simple as outlined below:

◾ Create a temporary User ID
◾ Fill online application and upload the required documents (including KYC documents)
◾ Submit signed application form along with Master Agreement and other documents to RXIL
◾ RXIL verifies the application submitted for registration
◾ Payment of Registration Fee
◾ Approval of application submitted for registration
Who can initiate TReDS transactions?

Both the Seller and the Buyer can initiate TReDS transactions for financing of trade receivables of MSME Sellers.
When the MSME Seller uploads the invoices and bears the interest cost it is termed as “Factoring” i.e. (Single Seller –
Multiple Buyers). In case of “Reverse Factoring” (Single Buyer – Multiple Sellers), the Buyer initiates the transaction
and the interest cost is also borne by the Buyer.

How it works?

Register with RXIL & RXIL undertakes Entity pays

execute Master Agreement verification and due diligence Registration Fees

Entity Onboarding
Onboarding Verification
Creation Fees

Establish Buyer-Seller Relationship Seller/Buyer uploads the Counterparty accepts invoice

Financier defines limit on buyer invoice on the TReDS platform Invoice converted to Factoring Unit

Factoring Pre- Upload of

Acceptance
Unit (FU) requisites Invoice

Financiers (with defined limits on Cost bearer accepts the RXIL generates Leg1 obligation
buyers) bid on invoices best bid in the auction - Financier to Seller

Bid Bid
Auction Obligation
Offerings Acceptance

Unfinanced or Failed
Debit Financier & Credit Seller Debit to Buyer & Credit to Financier Leg3 settled between Buyer
Register FU with CERSAI Satisfaction FU from CERSAI and Seller

Leg1 Leg2
Settlement Leg 3
(T+1) (Due Date)
TReDS is the first attempt in India to introduce factoring without recourse
to the seller and will help MSME Sellers, not only in quick realisation of
receivables but also efficient price discovery.

Key Benefits – All Participants

◾ Automated transparent platform

◾ Paperless and hassle free
◾ Cost Reduction

Benefits to Sellers

◾ Competitive price discovery

◾ Without recourse to Seller
◾ MSMEs have the right to choose the best bid
◾ Payment received on T+1 on successful auction
◾ No follow-up with the buyers for payment
◾ Not dependent on single financier
◾ Enhanced productivity and efficient liquidity management
◾ Widening the financing options

Benefits to Buyers

◾ Compliant with MSMED Act, 2006

◾ Can negotiate better terms with MSME Vendors
◾ Lower cost of inputs for Buyers
◾ Lower administrative cost
◾ Can avail extended credit period
◾ Competitive Price Discovery
◾ Efficient cash-flow management
◾ Ensure that their vendors are not strapped for cash / working capital

Benefits to Financiers

◾ Banks are eligible for Priority Sector Lending (PSL) benefits

◾ Financiers can rely on KYC of TReDS platform
◾ Acquire new customers at lower cost
◾ Reduce operational cost
 National Stock Exchange of India Limited (NSE)

NSE is the leading stock exchange in India and the fourth largest in the world by equity trading
volume in 2015, according to WFE. India Index Services & Products Limited (IISL), a wholly
owned subsidiary of NSE, developed, owns and manages the NIFTY 50 index, a leading
benchmark for the Indian capital markets. NSE offers comprehensive coverage of the Indian
capital markets across asset classes, including equity, fixed income and derivative securities.
NSE has a fully-integrated business model comprising exchange listings, trading services,
clearing and settlement services, indices, market data feeds, technology solutions and
financial education offerings. For more information, please visit www.nseindia.in

Small Industries Development Bank of India (SIDBI)

Small Industries Development Bank of India (SIDBI), set up on April 2, 1990 under an Act of
Indian Parliament, is the Principal Financial Institution for the Promotion, Financing and
Development of Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of
the functions of the institutions engaged in similar activities. It has pioneered products in niche
segments not conventionally addressed by the formal banking sector viz., Risk Capital, Energy
Efficiency Products for MSMEs etc. besides Receivable Finance Scheme by pioneering of bill
discounting facilities. For more information please visit www.sidbi.in

Contact

Receivables Exchange of India Ltd. (An NSE – SIDBI JV)

Exchange Plaza, Plot C-1, G Block
Bandra Kurla Complex
Bandra (East)
Mumbai - 400051

Toll Free No: 1-800-2668733 (1-800-266-TRED)

E-mail: info@rxil.in
Portal: www.TReDS.in
Website: rxil.in