Receivables Exchange of India Ltd (RXIL), which is the first TReDS platform that has completed five years of existence, expects to clock business of ₹13,000 crore this fiscal, Ketan Gaikwad, Managing Director & CEO, has said.
This would be double the business — value of MSME and corporate invoices processed in the digital TReDS platform — of ₹6,500 crore recorded in the previous fiscal, Gaikwad told BusinessLine.
Gaikwad also said that RXIL had already clocked business volumes of ₹10,000 crore this fiscal.
Trade Receivable Discounting Systems (TReDS ) is an electronic platform for facilitating the financing/discounting of trade receivables of micro, small and medium enterprises through multiple financiers. These receivables can be due from corporates and other buyers, including government departments and public sector enterprises.
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It maybe recalled that the first transaction on TReDS in India happened on January 9, 2017 and this transaction was put through RXIL. There are three main TReDS platforms operating in the country. One of the big benefits of TReDS is that MSMEs are not required to give collateral and there will be no recourse to them in case of defaults.
“This has been a significantly good year for us this fiscal when we will double our volumes. In first three months (April-June 2021), we were hit by Covid-19 and resulted in drop of volumes by 60 per cent. But from there we have picked up”, Gaikwad said.
RXIL is now in talks with two large State governments to see if they could be onboarded in the platform. RXIL already has Goa government on board and the State has so far done transactions worth ₹600-700 crore.
“We are talking to much larger governments to come on board. Some of the State governments are talking to us as they see value. Just a matter of time when large States would get started with us,” Gaikwad said.
Although the business volumes are set to double to ₹13,000 crore, this is not an optimal level of growth, he noted.
“One can say we have achieved optimal growth only when we achieve volumes of ₹60,000 crore a year. There is enough runway for growth in private sector. However, TReDS platform will go on to become a phenomenal success only if public sector companies start coming. We have also not even scratched the surface in terms of number of MSMEs registered in TReDS.
“PSUs are registered but they are not doing any transactions on the platform. There is need for government push. Hardly 10-15 PSUs are active”, Gaikwad said.
So far, all three TReDS platforms in the country put together have done transactions worth ₹65,000 crore. Of this PSUs contribution is hardly ₹4,500 crore.
Asked about the Factoring Act changes and the RBI’s January circular, Gaikwad said that only 182 NBFCs have qualified to start doing TReDS business after RBI guidelines came out. “It is going to be some more time for NBFCs to come into the scene in a big way. The coming in of NBFCs will help increase liquidity in TReDS platform. There can be sector-specific NBFCs that can come in,” he noted.
On the operational convenience of allowing registration of charges on the CERSAI platform through the TReDS platform, Gaikwad said this is expected to go live from April 1 this year.
“We are upgrading our platform and asked some changes for CERSAI. Once that gets done, from April 1 the implementation will happen for registration of charges at CERSAI platform through TReDS platform. Earlier financiers were recording their charge, now TReDS platform would be recording their charge on behalf of financiers,” he said.