What is RXIL?

RXIL is Receivables Exchange of India. Recently RXIL has become the first TReDS platform to cross monthly throughput of Rs 1000 crores. The transaction volume in the platform grew from Rs 69 crores in April 2020 to Rs 1,105 crores in March 2021. This shows economic recovery in the country. Also, it shows that the MSME sector that was badly hit during COVID-19 is getting revived.

About RXIL

  • RXIL was incorporated in 2016.
  • It is a joint venture between Small Industries Development Bank of India (SIDBI) and National Stock Exchange of India Limited.
  • It operates TReDS.
  • It was the first entity to receive approval from RBI to launch the first TreDS Exchange of India.
  • RXIL is an integrated provider of financial platform that supports growth and development of MSMEs.

What is TReDS?

  • TReDS is an electronic platform that facilitates financing of MSMEs through multiple financiers.
  • The main three participants in the TreDS are MSMEs (sellers), financiers and Corporate entities (buyers).
  • According to RBI, only MSMEs can participate as sellers in TReDS.
  • In 2015, RBI granted approval for SIDBI and NSICL to set up and operate TReDS.
  • It can help the MSMEs unlock their working capital.
  • It ensures higher efficiency and capital management.

How does TReDS work?

The seller first uploads an invoice. This invoice waits for an acceptance from a buyer. After the buyer accepts the invoice, it goes for auction. The financiers enter discounting rates. The party bearing the interest cost will accept the best bid. Later the financier account is debited and seller account is credited.

Legality of TReDS

The RBI granted permission for the operation of TReDS in the country based on the guidelines under Payment and Settlement System Act, 2007.

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