1.The importance of MSMEs & the trade solution: Micro, small & medium enterprises (MSMEs) are vital to the country’s economy generating employment & wealth. However, they often struggle to access timely funding. The covid-19 pandemic has exacerbated this issue.
2. The challenge delayed repayment: Delayed repayment, primarily due to lending on sale, hinders, MSMEs growth. This challenge necessitates innovative solutions.
3. Introducing Trades (Trade receivables Electronic Discounting System): The Reserve Banks Trades addresses this issue. Trades enables MSMEs to discount unpaid sales invoices electronically, securing funds from financial institutions.
4. Key Benefits of Trades:
a) Exemption from stay: Lending on sale is exempt from stay forreturns.
b) Receivable discounting: Transfers unpaid invoices to financial institutions at a discounted price.
c) Immediate Funding: Debentures can be discounted and encashed in real-time.
Trades streamlines MSMEs access to capital, mitigating funding delays & promoting growth.