The Central Government has made it mandatory for all CPSEs to settle invoices of MSME suppliers through RBI-authorised TReDS platforms. The initiative aims to eliminate payment delays, improve working capital access through collateral-free invoice financing, and strengthen financial support for India’s MSME sector.
Key Highlights
- All CPSEs must route MSME invoice settlements through RBI-authorised TReDS platforms.
- The move is aimed at reducing payment delays and improving MSMEs’ working capital.
- CPSEs must disclose TReDS transactions and obtain statutory audit compliance certification.
- The reform implements a key announcement made in the Union Budget 2026-27.
New Delhi, July 10: The Central Government has mandated all operating Central Public Sector Enterprises (CPSEs) to route the settlement of invoices for goods and services procured from Micro, Small and Medium Enterprises (MSMEs) through Reserve Bank of India (RBI)-authorised Trade Receivables Discounting System (TReDS) platforms. The reform is expected to significantly reduce payment delays and improve access to affordable working capital for MSMEs across the country.
According to an official notification, CPSEs will now be required to disclose details of MSME invoices routed and settled through TReDS, as prescribed by the RBI. In addition, every CPSE must obtain a statutory auditor’s certificate confirming TReDS registration and compliance during its annual audit, ensuring greater accountability and transparency.
The government said the initiative will position Central Public Sector Enterprises as role models for timely payment discipline, encouraging large corporate buyers to adopt similar practices. The decision also fulfills a key commitment announced in the Union Budget 2026-27, reinforcing the government’s focus on strengthening the MSME ecosystem.
Under the new framework, every approved CPSE invoice uploaded on TReDS can be converted into immediate working capital by MSME suppliers, well before the payment due date. Financing through the platform is collateral-free and without recourse to the seller, while banks and Non-Banking Financial Companies (NBFCs) compete to offer attractive invoice discounting rates, enabling MSMEs to access funds at competitive interest rates.
The government noted that routing all CPSE procurement invoices through TReDS will ensure faster payments, improve cash flow, and strengthen financial inclusion for small businesses. The platform also creates greater visibility into procurement transactions while promoting a more efficient and transparent payment ecosystem.
MSMEs remain the backbone of India’s economy, with more than 8.70 crore enterprises registered on the Udyam Portal and providing employment to over 38 crore people. Since becoming operational in 2017, TReDS has served as an RBI-regulated electronic platform that enables financing and discounting of MSME trade receivables from corporate buyers, government departments and public sector undertakings through competitive bidding by multiple financial institutions.
Conclusion
The mandatory adoption of TReDS by CPSEs marks a major step toward ensuring timely MSME payments, improving liquidity, and creating a stronger, more transparent procurement ecosystem for India’s small businesses.
