Mumbai: The Reserve Bank of India has allowed financiers on Trade Receivables Discounting System (TReDS) platforms to avail guarantee cover for receivables financed through the platform, a move aimed at deepening credit access for micro, small and medium enterprises (MSMEs) and encouraging greater participation by lenders.Under the Reserve Bank of India (Trade Receivables Discounting System) Directions, 2026, issued on Monday and effective immediately, financiers will be permitted to obtain guarantees for factoring units from any credit guarantee fund trust set up by the government. The directions also formally recognise such guarantee trusts as participants on TReDS platforms.The move is expected to reduce credit risk for financiers and improve liquidity in the receivables financing ecosystem, particularly for transactions involving smaller borrowers and buyers with limited credit histories.Also Read | Kotak Mahindra Bank has 'high ambitions' to deploy capital for growth, CEO saysTReDS is an electronic platform that enables MSMEs to auction and discount their trade receivables to multiple financiers, allowing them to convert invoices into working capital before payment is received from buyers.The central bank said the directions follow a comprehensive review of the existing framework and seek to rationalise and harmonise regulations governing TReDS platforms. Besides permitting guarantee cover, the revised framework streamlines onboarding requirements for MSME sellers and aligns capital requirements for platform operators with those applicable to other non-bank payment system operators.The directions also allow financiers to obtain insurance cover for TReDS exposures, subject to the condition that the insurance premium is not passed on to MSME sellers. However, such insurance cannot be treated as a credit risk mitigant for availing prudential regulatory benefits.Also Read | RBI Governor asks banks to treat MSMEs as growth partnersIn another significant change, the RBI has formally permitted further discounting and re-discounting of receivables financed on TReDS, allowing financiers to transfer discounted factoring units to other eligible financiers in accordance with applicable regulations. The move could help improve liquidity and facilitate the development of a secondary market for receivables financing.The new framework also strengthens the legal enforceability of transactions undertaken on TReDS. Once a buyer accepts a factoring unit on the platform, the obligation to make payment on the due date becomes unconditional, with no scope for set-offs relating to disputes over quality of goods or services.To strengthen transparency and reduce financing risks, TReDS platforms have been directed to ensure registration of receivable assignments with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI). Platforms must also put in place validation mechanisms to verify MSME status and ensure that funds are credited directly to the seller's bank account.The RBI has retained a minimum net-worth requirement of Rs 25 crore for TReDS operators and has given existing platforms until March 31, 2028, to comply with the revised capital norms.The central bank introduced TReDS to address the persistent working capital challenges faced by MSMEs by enabling them to monetise receivables through a transparent, technology-driven marketplace involving multiple financiers.