Reserve Bank of India has issued a Master Direction on TReDS, superseding the TReDS Guidelines (updated July 02, 2018) and Circular CO.DPSS.POLC.No.S-258/02-01-010/2023-24 dated June 07, 2023. The Master Direction is addressed to TReDS Platform Operators and Participants.

Master Direction applies to entities authorised to operate TReDS platforms under the Payment and Settlement Systems Act, 2007. The applicant must be a company incorporated in India with its Memorandum of Association covering TReDS platform operations.

The minimum net-worth requirement is ₹25 crore, certified by the statutory auditor. Existing authorised entities must meet this criterion by March 31, 2028. Minimum net-worth must be maintained on an ongoing basis.

Permitted participants are Sellers (MSMEs), Buyers, Financiers, Insurance Companies, and the Credit Guarantee Fund Trust notified by the Government of India. The platform shall facilitate uploading, accepting, bidding, discounting, and settlement of invoices/bills. Factoring units discounted under TReDS shall be “without recourse” to sellers. Financiers may avail insurance for TReDS transactions provided the premium is not levied on the seller and credit insurance shall not be treated as a Credit Risk Mitigant. Financiers may avail guarantee from any credit guarantee fund trust set up by the Government of India.

Reporting obligations include: annual net-worth certificate by September 30; system audit report; monthly TReDS statistics by the 7th of the following month; and non-periodic declaration by Director upon board changes.