RXIL's TReDS let small suppliers sell big buyers' invoices for cash, no collateral

A small factory in India ships parts to a large company, then waits 60 to 90 days for payment. To survive the wait it borrows - but banks ask for collateral the firm rarely has, and price the loan on the firm's thin balance sheet rather than on the blue-chip customer who owes the money. This gap between delivering value and getting paid is one of the biggest killers of Indian small business.

TReDS (Trade Receivables Discounting System) flipped the collateral. On RXIL, the first exchange, built as a joint venture between state-owned SIDBI and the National Stock Exchange with SBI, ICICI and Yes Bank as stakeholders, a supplier uploads an invoice the big buyer has accepted. Financiers bid to buy it at a discount; the seller picks the best bid and is paid in days, with no collateral and no recourse if the buyer defaults. The buyer's credit rating does the borrowing.

The first transaction ran on 9 January 2017. Growth was slow at first - public-sector buyers, the natural anchor tenants, were hesitant - but India's TReDS discounting grew from about Rs 40,000 crore in FY22 to Rs 3.47 lakh crore in FY26, and in July 2026 the government made the platform mandatory for every central public sector enterprise paying MSME suppliers.

Finance the buyer's credit, not the seller's collateral

India's big buyers paid small suppliers in 60-90 days, and MSMEs bridged the gap with loans most could not collateralize.

Traditional factoring put debt on the seller with recourse; on TReDS the seller sells a receivable at a market-driven rate with no recourse.

An exchange with multiple financiers bidding turns a bilateral negotiation, in which the buyer holds all the power, into a market price.

Government anchored demand: late-payment rules pushed public buyers onto the platform, giving financiers a flow of buyer-confirmed invoices.

Working capital gets trapped in receivables, not in bad credit. Price the buyer's obligation instead of the supplier's assets, and the bank that refused the small firm funds it in days.

By April 2022 RXIL alone had onboarded about 10,000 MSMEs and financed over 13 lakh invoices worth over Rs 23,000 crore, doubling to Rs 13,400 crore that year. Across all TReDS platforms, discounting grew from about Rs 40,000 crore in FY22 to Rs 3.47 trillion in FY26, per the MSME ministry. The Union Budget 2026-27 proposed CGTMSE credit guarantees on TReDS invoices, GeM integration and receivables as asset-backed securities. In July 2026, routing MSME payments through TReDS became mandatory for every central public sector enterprise, with statutory auditors certifying compliance.