MUMBAI: To help MSMEs, RBI permitted setting up of an exchange-based trading platform to facilitate financing of bills raised by such small entities to corporate and other buyers, including government departments and PSUs.

Issuing detailed guidelines in this regard, RBI said the Trade Receivables Discounting System (TReDS) should have a minimum paid up equity capital of Rs 25 crore and non-promoters would not hold over 10 percent of the equity capital of TReDS.

Micro, Small and Medium Enterprises (MSMEs), despite the important role played by them in the economic fabric of the country, continue to face constraints in obtaining adequate finance, particularly in terms of their ability to convert their trade receivables into liquid funds, RBI said.

"Since the TReDS will not be allowed to assume any credit risk, its minimum paid up equity capital shall be Rs 25 crore. The foreign shareholding in the TReDS would be as per the extant foreign investment policy.

"Entities, other than the promoters, will not be permitted to have shareholding in excess of 10 percent of the equity capital of the TReDS. The overall financial strength of the promoters/entity seeking to set up TReDS would be an important criteria of assessment/selection," the central bank said.

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