by Sachin Murdeshwar

Small Industries Development Bank of India (SIDBI), the principal financial institution engaged in the promotion, financing and development of Micro, Small and Medium Enterprises (MSMEs), is setting up ‘Swavalamban Crisis Responsive Fund’ to support free onboarding of MSMEs on Trade Receivables Discounting System (TReDS). Receivables Exchange of India Ltd. (RXIL), M1xchange and Invoicemartare three TReDS platforms which help MSMEs gain access to working capital through invoice discounting via multiple financiers.

Shri Mohammad Mustafa, IAS, Chairman and Managing Director of SIDBI said, “The government has been taking several steps to strengthen the MSME ecosystem and these vehicle to implement several Government of India initiatives towards quickresponse to COVID-19 fallout. The present endeavor of setting up Swavalamban Crisis Responsive Fund (SCRF), under Swavalamban Resource Facility, where SIDBI partners with Department for International Development (DFID) UK, is yet another differentiated intervention by the Bank. It aims at offering relief to the MSMEs during these challenging times. We are hopeful that MSMEs shall maximize this opportunity to onboard TReDS, thus getting much needed breather from squeezed/severely crunched cash flow.”

TReDS is an electronic platform where receivables of MSMEs drawn against buyers (largecorporates, Public Sector Undertakings, Government Departments, etc.) are financed through multiple financiers atcompetitive rates through an auction mechanism. TReDS is an answer to the everlasting cash flow issues of the MSMEs particularly in these COVID-19 challenging times. In order to induce MSMEs to increasingly join on these platforms and leverage the gains, discussions were conducted with these platforms. They have all proactively come forward to join the national responsive initiative to extend free onboarding access to MSMEs till September 2020. The fundwould be utilized to partially offset the cost of joining/registration fee on the TReDS platform and support the TReDS Companies to ensure free onboarding charges for MSMEs.

SIDBI is also spearheading a differentiated cluster outreach program in clusters of 10 cities where through 5 partner institutions (Fintech, Non-Banking Financial Companies-Microfinance Institutions or NBFC-MFIs) it shall be creating awareness on TReDS, Government e-Marketplace etc. and maximize onboarding of MSMEs.