Seven Seek RBI Licence To Operate Trade Financial System
CHENNAI: Seven entities, including Axis Bank and SIDBI, have applied for licences to set up and operate Trade Receivables Discounting System (TReDS) - an institutional arrangement to meet financing needs of micro, small and medium enterprises (MSME) through discounting their trade receivables, said the Reserve Bank of India.
The list of applicants for setting up TReDS released by the Reserve Bank of India (RBI) are: NSE Strategic Investment Corporation Ltd. (NSIC), and Small Industries Development Bank of India (SIDBI), Mumbai; Trade Receivables Exchange (Group of Banking Professionals), Mumbai; Axis Bank Ltd.; Mynd Solutions Pvt. Ltd., Gurgaon; DICIC Bank of India, Kolkata; NSDL Data base Management Ltd. (NDML), Mumbai; and Trade Receivables Exchange (T-REX), Mumbai.
The RBI had invited applications for setting up of and operating TReDS. The last date for receiving applications was February 13, which was extended up to March 9.
In December 2014, the RBI came out with its guidelines for setting up and operating TReDS.
According to the guidelines issued by the RBI, the start-up capital for TReDS outfits will be a minimum of 
25 crore and entities other than promoters will not be permitted to have shareholding over 10 percent of the equity capital.
The guidelines said the promoters/promoter groups should be "fit and proper" to operate TReDS.
The RBI would assess the "fit and proper" status of the applicants on the basis of their past record of sound credentials and integrity; financial soundness and track record of at least five years in running their businesses.
It may also seek feedback on the applicants on these or any other relevant aspects from other regulators, and enforcement and investigative agencies like Income Tax, the Central Bureau of Investigation (CBI), the Enforcement Directorate, the Securities and Exchange Board of India and others.
Since technology is going to play an important role in operations, the RBI has stipulated that TReDS shall be able to provide electronic platform for all the participants and information about bills/invoices, discounting and quotes should be communicated on real time basis.
The TReDS shall have a suitable Business Continuity Plan (BCP) including a disaster recovery site and also have an online surveillance capability to monitor positions, prices and volumes in real time so as to check system manipulation, it said.
