India, Sept. 25 -- The Government of India has issued a release:
In line with the Union Budget Announcement to provide credit guarantee cover on Trade Receivables Discounting System (TReDS) platform, the Ministry of Micro, Small and Medium Enterprises has rolled out provisioning of credit guarantees on invoice discounting of Micro and Small Enterprises.
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) Portal of the Ministry of MSME has now been integrated with the TReDS ecosystem, and Credit Guarantee Coverage is now available on three platforms: M1xchange, RXIL and DTX (KredX). This is among the Ministry of MSME and CGTMSE's fastest technology-enabled roll-outs; bringing credit guarantee support closer to Micro and Small Enterprises and helping them access working capital faster through invoice discounting on TReDS.
The recently announced go-live of CGTMSE guarantee cover on three platforms is designed to help mitigate credit risk for financiers, enable greater financing of eligible receivables of Micro and Small Sellers, and support timely access to working capital for Micro and Small Buyers and Sellers at competitive rates.
CGTMSE has been integrated with the platforms, digitising the entire guarantee journey for financiers. Whereas Financiers can also check invoice eligibility and apply for CGTMSE cover in real time on the platform. This triggers automatic guarantee fee calculation based on invoice value, financier type and tenor, fee debit, and automatic generation of the cover note and corresponding invoice.
Dr. Rajneesh, Additional Secretary & Development Commissioner, Ministry of Micro, Small and Medium Enterprises presided over this roll-out and said, "Extending CGTMSE-backed guarantee cover to TReDS receivables is an important step in translating the Union Budget's Announcement into on-ground impact, further strengthening the financing ecosystem for MSMEs by improving access to timely and formal sources of credit. It will also help in addressing the issue of delayed payments of MSEs."
TReDS: Strengthening Access to Timely Working Capital for MSMEs
-Who is eligible: Both the buyer and the seller must be Micro or Small Enterprises (MSEs).
-Guarantee cover: 75% of the amount in default.
-Maximum exposure: Rs.10 crore for an MSE buyer and Rs.2 crore for an MSE seller on a revolving basis.
Disclaimer: Curated by HT Syndication.
