The Trade Receivables Discounting System, popularly known as TReDS, has emerged as a beacon of hope for India’s micro, small, and medium enterprises (MSMEs) struggling to access timely credit. Since its launch in 2017, this digital platform has steadily grown, facilitating invoice financing worth over Rs 5.33 lakh crore. Yet, with an overwhelming credit shortfall estimated at Rs 20-25 lakh crore and only 20% of MSMEs accessing formal loans, experts insist that TReDS must widen its horizon to truly bridge the gap.
Vijay Mani, Partner and Banking Leader at Deloitte India, explains, “The TReDS platform meets less than 5% of the credit demand from MSMEs. While it improves liquidity through discounted invoices, limited corporate buyer participation restricts its reach. To grow, incentives for buyers and data privacy assurances are essential.”
Anil Bharadwaj, Secretary General of the Federation of Indian Micro and Small & Medium Enterprises, voices concerns over buyer hesitance. “TReDS depends heavily on buyers who are wary of exposing payment habits. The onboarding process is often tough for smaller MSMEs,” he says. Bharadwaj adds that public sector enterprises contribute a mere 10% of transactions, highlighting room for broader adoption.
Recent policy shifts, like lowering mandatory buyer onboarding thresholds from Rs 500 crore to Rs 250 crore turnover, aim to bring more players onboard. M1xchange, one of the TReDS operators, has seen remarkable growth—facilitating Rs 2.35 lakh crore in FY25, a surge from Rs 1.38 lakh crore last year. According to Sundeep Mohindru, Promoter and Director of M1xchange, “With over 1.5 lakh MSMEs from 2,200 cities, TReDS is poised to bridge the credit divide, though awareness in semi-urban and rural areas needs urgent attention.”
Basant Kaur, COO of C2FO India, sees vast untapped potential. “Enhanced policy backing and expanded participation can elevate TReDS from niche to mainstream financing, unlocking liquidity for MSMEs nationwide.”
Yet challenges linger. Dependence on buyer approval, limited digital literacy, lack of credit insurance, and buyer inertia—especially among large corporations and PSUs—hamper growth. Mohindru emphasizes innovative credit assessment using digital data to boost lender confidence.
Experts urge government action: integrate TReDS with GST portals, incentivize larger buyers, enable credit insurance, and activate credit guarantee funds to expand financing options. “Allowing SMEs to discount invoices without buyer consent could unlock further opportunities,” Mohindru suggests.
In sum, TReDS is a vital step towards MSME financial inclusion but needs collaborative innovation and policy support to flourish and transform India’s vast MSME landscape.
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