**Executive Summary**
Effective June 30, 2026, the Ministry of MSME has mandated that all operating Central Public Sector Enterprises (CPSEs) must settle MSME invoices through the Trade Receivables Discounting System (TReDS). This directive fulfills a Union Budget 2026–27 commitment aimed at resolving delayed payments and providing MSMEs with quicker, collateral-free working capital. CPSEs are now required to maintain statutory compliance and disclose TReDS-settled transactions during annual audits.
**Key Points / Main Content**
**Mandatory Settlement and Compliance**
* **Mandatory TReDS Usage:** All operating CPSEs must route the settlement of invoices for goods and services procured from MSMEs through RBI-authorized TReDS platforms.
* **Audit Requirements:** CPSEs are required to obtain a statutory auditor’s certificate during their annual audit to verify TReDS registration and compliance.
* **Disclosure Standards:** CPSEs must disclose specific details of MSME invoices settled through TReDS as per guidelines specified by the Reserve Bank of India (RBI).
**Financing and MSME Support**
* **Liquidity Access:** MSME suppliers can convert approved CPSE invoices into immediate cash before the due date through competitive bidding.
* **Collateral-Free Financing:** Financing on TReDS is provided without the need for collateral and is "without recourse" to the MSME seller.
* **Competitive Bidding:** Banks and NBFCs bid competitively to discount invoices, ensuring MSMEs receive working capital at competitive interest rates.
**System Scale and Infrastructure**
* **Authorized Platforms:** There are currently five operational TReDS platforms: RXIL, M1xchange, Invoicemart, C2treds, and DTX.
* **Growth Trends:** The platform has expanded significantly, with invoice discounting increasing from ₹40,000 crore in FY 2021-22 to ₹3.47 lakh crore in FY 2025-26.
**Impact Analysis**
**Central Public Sector Enterprises (CPSEs)**
**Impact**
CPSEs are now legally obligated to transition their MSME payment processes to TReDS. They are positioned as role models for payment discipline but face stricter reporting and auditing standards.
**Action Required**
CPSEs must onboard onto authorized TReDS platforms, route all MSME settlements through these systems, and ensure statutory auditors certify their compliance annually.
**Micro, Small and Medium Enterprises (MSMEs)**
**Impact**
MSMEs gain improved cash flow and relief from the "persistent challenge" of delayed payments. They can access competitive, non-recourse financing without providing collateral.
**Action Required**
MSMEs should utilize the Udyam registration portal and authorized TReDS platforms to upload and discount their approved invoices for faster payment.
**Financial Institutions (Banks and NBFCs)**
**Impact**
There is an increased opportunity for banks and NBFCs to participate in invoice financing for public sector procurement, backed by the security of CPSE-approved receivables.
**Action Required**
Financiers must participate in the competitive bidding process on TReDS platforms to provide discounting services to MSME suppliers.
Key Entities Referenced
Trade Receivables Discounting System (TReDS): An RBI-regulated electronic platform mandated for the compulsory settlement of invoices for goods and services procured by CPSEs from MSMEs.
Union Budget 2026–27: The national budget document that introduced the commitment for mandatory TReDS settlement for Central Public Sector Enterprises.
Central Public Sector Enterprises (CPSEs): Government-owned entities now mandated to route all MSME invoice settlements through TReDS platforms and obtain compliance certification from statutory auditors.
Ministry of Micro, Small & Medium Enterprises (MSME): The primary ministry that issued the notification to enforce timely payment discipline and mandatory use of TReDS for MSME suppliers.
Reserve Bank of India (RBI): The regulatory authority responsible for authorizing TReDS platforms and specifying the disclosure details for MSME invoice settlements.
Ministry of Micro,Small & Medium Enterprises
Faster Payments, Stronger MSME: Government
Mandates TReDS for Settlement of All MSME
Invoices by Central Public Sector Enterprises
Notification dated 30 June 2026 fulfils Union Budget 2026–27
commitment; unlocks quicker, collateral-free working capital
for lakhs of MSME suppliers
प्रव तथ: 10 JUL 2026 11:43AM by PIB Delhi
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.
A benchmark for corporate India: The mandate positions Central Public Sector Enterprises (CPSEs) as
role models for timely payment discipline for large corporate buyers across the country.
In a decisive step to end the long wait for payments faced by Micro, Small and Medium Enterprises
(MSME), the Ministry of MSME, Government of India, has notified the mandatory use of the Trade
Receivables Discounting System (TReDS) by all operating Central Public Sector Enterprises (CPSEs) for
the settlement of transactions with their MSME suppliers. The Notification, issued on 30 June 2026, gives
effect to a key announcement of the Union Budget 2026–27.
MSMEs are the backbone of the Indian economy, with over 8.70 crore enterprises registered on the
Udyam Registration Portal and Udyam Assist Platform providing employment to more than 38 crore
persons. Yet delayed payments remain one of the sector’s most persistent challenges, locking up working
capital and constraining growth. By making TReDS the settlement route for all CPSE purchases from
MSME, public sector procurement will now work actively for the small supplier: procurement by CPSEs
gets captured on TReDS, and timely payment to MSME will be ensured through invoice financing from
banks and financial institutions.
What This Means for MSMEs
With every CPSE invoice flowing through TReDS, MSME suppliers have the option to convert approved
invoices into cash well before the due date. Financing on TReDS is collateral-free and without recourse to
the seller, with banks and NBFCs bidding competitively to discount invoices, giving MSMEs working
capital within a short span of time at competitive rates of interest.
About TReDSTReDS is an RBI-regulated electronic platform, operational since 2017, for financing and discounting the
trade receivables of MSMEs due from corporate buyers, Government Departments and Public Sector
Undertakings, through competitive bidding by multiple financiers. Five platforms are currently
operational: RXIL, M1xchange, Invoicemart, C2treds and DTX. The platform has grown from strength to
strength, with invoice discounting increasing from ₹40,000 crore in FY 2021-22 to ₹3.47 lakh crore in FY
2025-26.
The TReDS Reform Journey
The Notification was issued on 30 June 2026. Full details are available in the Gazette of India at https://eg
azette.gov.in.
***
Sunil Kumar Tiwari
E-mail - hipessi[at]gmail[dot]com
(रलीज़ आईडी: 2283195) आगंतुक पटल : 1002
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