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RBI by notification dated 23.06.2026 has notified the RBI (Trade Receivables Discounting System) Directions, 2026 (“TReDS Directions”)1 . The TReDS Directions apply to all entities authorised by RBI to operate Trade Receivables electronic Discounting System (“TReDS”) platforms under the Payment and Settlement Systems Act, 2007.
The salient features of the TReDS Directions are as follows:
(i) Authorisation of TReDS platforms: An entity seeking authorisation to operate a TReDS platform has to obtain authorisation from the RBI in accordance with the Master Direction on Authorisation to Operate a Payment System (“PS Directions”), be incorporated in India under the Companies Act, 2013 with its Memorandum of Association authorising operation of a TReDS platform, obtain a no objection certificate from the relevant financial sector regulator and submit the application within 45 days where it is regulated by such authority, and comply with the Consolidated FDI Policy of the Government of India and applicable foreign exchange management regulations where foreign direct investment is involved.
(ii) Capital requirements: Every applicant has to maintain a minimum net worth of INR 25 crore and submit a statutory auditor’s certificate in the prescribed format under the PS Directions. Existing authorised TReDS entities must comply with this requirement by 31.03.2028 and maintain the prescribed minimum net worth on an ongoing basis.
(iii) Scope of activities: The TReDS platform shall facilitate uploading, acceptance, bidding, discounting and settlement of invoices or bills and establish mechanisms to verify the genuineness of uploaded invoices or bills.
(iv) Operational requirements: The TReDS Directions require the platform to, inter alia:
- Ensure that accepted factoring units have the same legal sanctity and enforceability as physical instruments or written agreements under the applicable laws.
- Execute master agreements containing provisions relating to the buyer's unconditional payment obligation, the seller's declaration regarding absence of multiple financing, and registration of assignment of receivables with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India.
- Undertake customer due diligence of buyers in accordance with the applicable know your customer directions.
- Verify that sellers qualify as Micro, Small and Medium Enterprises (“MSME”) and ensure that payments are credited only to the seller’s bank account.
- Facilitate transparent bidding by multiple financiers and enable assignment of receivables, intimation to banks and payment by the buyer to the financier on the due date. (f) Permit further discounting or re-discounting of factoring units by financiers, subject to applicable RBI directions.
- Ensure that factoring units discounted through TReDS are on a “without recourse” basis to the seller and that defaults by buyers shall not be the responsibility of the TReDS platform.
- Permit financiers to avail insurance and guarantee facilities, subject to the conditions prescribed under the TReDS Directions.
- Maintain custody of all master agreements executed on the platform.
(v) Clearing and settlement: The TReDS platform shall facilitate settlement between financiers and sellers and between buyers and financiers through any authorised payment system. The settlement mechanism may also be used for both financed and unfinanced transactions and related functionalities such as insurance premium collection, claim settlement and payment of fees or commissions.
(vi) Reporting requirements: Every authorised TReDS entity shall submit returns to RBI in accordance with the reporting requirements prescribed under the annexure to TReDS Directions.
The TReDS Directions have come into force on the day they were notified, i.e., 23.06.2026.
Footnote
1 Reserve Bank of India (Trade Receivables Discounting System) Directions, 2026.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
