THE NACH MANDATED TREDS SETTLEMENT LIMIT WOULD BE INCREASED TO 3 CRORE

The Reserve Bank of India (RBI) increased the mandated limit for Trade Receivables Discounting System (TReDS) related settlements to the invoice discounting mechanism for MSMEs from Rs 1 crore to Rs 3 crore in its monetary policy review. According to RBI Governor Shaktikanta Das, “it is proposed to increase the NACH mandate limit for TReDS related settlements from Rs 1 crore at present to Rs 3 crore in view of requests received from stakeholders and to further enhance the ease of financing the growing liquidity requirements of MSMEs. The TReDS makes it easier for MSMEs to finance their trade receivables. TReDS transactions are settled using the NACH system.

The RBI introduced the on-tap authorisation of TReDS operators in October 2019 to encourage innovation and competition through increasing participation. Importantly, on July 1, 2020, the government amended the MSME definition based on yearly turnover, expanding the scope of the MSME sector to cover businesses with a turnover of up to Rs 250 crore.

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