Most CPSEs yet to use TReDS to pay vendors

Mumbai: Three years ago, it was billed as the perfect solution to solve the working capital woes at small businesses. But despite the push by the government, many of the companies it owns are yet to onboard their small vendors on the Trade Receivables Discounting System (TReDS) platform.

Only 32 of the 255 central public sector enterprises (CPSEs) mandated by the government to settle vendor dues on TReDS have made some transactions on the platform since it was introduced in 2017, documents accessed by ET showed.

More than 100 CPSEs have not even registered on the platform as of March 2020, despite the government seeking mandatory compliance a number of times. ET has reviewed a copy of the performance update by TReDS stakeholders.

As of March, only eight CPSEs have settled dues worth more than ₹10 crore on the platform. These include BHEL, Indian Oil, BPCL, HPCL, Rashtriya Chemicals & Fertilizers, SAIL, Garden Reach and Vizag Steel.

“TReDS platforms are pursuing the CPSEs to note the seriousness attached with the initiative; however, many CPSEs as stated above are yet to start transacting on the platforms…,” as per the cited document.

It further noted that as of March, only ₹1,020 crore worth of dues had been settled by these 32 CPSEs.

The total dues settled over the period on the platform exceed ₹18,000 crore.

TReDS is an electronic bill discounting platform regulated by the central bank and endorsed by the Centre to provide MSME ‘suppliers’ of corporate ‘buyers’ instant payments for future receivables. Banks and NBFCs finance invoices at competitively priced interest on a bidding basis on the platform, which then get structured as short-term loans to corporates with a maximum maturity period of 180 days.

However, an industry official requesting anonymity said that the Centre’s circulars have largely gone without heed as several top CPSEs have remained reluctant to transact on the platform citing onboarding and compliances related challenges.