RXIL becomes first TReDS platform to cross Rs 1,000 monthly throughput, What is RXIL? Explained

The Receivables Exchange of India Ltd (RXIL) crossed the monthly transaction volumes of Rs 1,000 crore in the month of March. What does it mean for the economy? Read here.

Created On: Apr 7, 2021 13:40 ISTModified On: Apr 7, 2021 13:40 IST
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The Receivables Exchange of India Ltd (RXIL) informed on April 6, 2021 that it had crossed the monthly transaction volumes of Rs 1,000 crore in March. 

The RXIL in a statement said, “The growth of transaction volumes from Rs 69 crore in April 2020 to Rs 1,105 crore in March 2021 is an indication of the revival and resumption of the economic activity.”

The FY 2020-21 also witnessed RXIL emerging as the leading platform with more than Rs 6,500 crore of throughput. Over 7,000 MSMEs (Micro, Small & Medium Enterprises) registered on the platform, RXIL claims to have processed around 5 lakh invoices drawn on over 600 buyers to date since its inception.

“MSMEs play a vital role in a developing economy like ours. To achieve the goal of a USD 5 trillion economy, MSMEs must have access to formal sources of low-cost working capital finance. TReDS enables MSMEs to secure finance on the strength of their buyer's credit rating without having to negotiate with financiers," Vikram Limaye, Managing Director and Chief Executive Officer of NSE said.

TReDS plays a critical role in ensuring seamless liquidity to MSMEs as well as filling up the credit gap, he added.

What is RXIL?

• Receivables Exchange of India Ltd (RXIL) is an RBI accredited TReDS platform that enables financing and discounting of trade receivables of MSMEs through several financiers. 

• It was incorporated in 2016 as a joint venture between the National Stock Exchange of India Limited (NSE)and the Small Industries Development Bank of India (SIDBI), the apex financial institution for promotion and financing of MSMEs in India along with ICICI Bank, Yes Bank, and State Bank as other stakeholders.

• It is the first platform to receive the RBI’s approval to launch the first TReDS Exchange of India.

What is TReDS?

• TReDS means Trade Receivables Discounting System.

• It is an electronic platformthat enables the financing and discounting of trade receivables of MSMEs from corporate and other buyers, including Government departments and Public Sector Undertakings (PSUs), through several financiers.

• The salient features of TReDS are a unified platform for sellers, buyers and financiers, seamless data flow, standardized practices, easy access to funds, elimination of paper.

• MSMEs in India face various hurdles in converting their trade receivables into liquid funds. In 2015, RBI approved SIDBI and NSICL for setting up and operating TReDS in adherence to the guidelines under the Payment and Settlement System Act, 2007.

With timely interventions through Gazette notifications, awareness campaigns, and circulars, TReDS has been instrumental in helping the MSMEs to tackle the liquidity crisis, said RXIL.

How does TReDS work?

• Creation of a Factoring Unit (FU) – a standard system referring to invoices or bills in TReDs.

• Acceptance of the Factoring Unit

• Bidding by financiers

• Selection of the best bid by the seller

• Payment by the financier to the MSME seller 

• Payment by the buyer to the financier

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