Module: General Practice
Q38: The Trade Receivables Discounting System (TReDS) is an electronic platform to facilitate the financing of trade receivables. Which of the following statements regarding TReDS is INCORRECT?
✅ Correct Answer: D
Correct Option: D Concept: Trade Receivables Discounting System (TReDS). Mechanism: TReDS is not a subsidy scheme.
It is a market mechanism (Factoring). How it works: The MSME uploads an invoice, and the Corporate Buyer accepts it.
Banks then bid to finance it at a discount.
The MSME gets immediate cash (minus interest). Cost: The interest cost is borne by the MSME (via the discount), not by the Government.
Regulatory Basis: It is regulated by the Reserve Bank of India (RBI).
It is a market mechanism (Factoring). How it works: The MSME uploads an invoice, and the Corporate Buyer accepts it.
Banks then bid to finance it at a discount.
The MSME gets immediate cash (minus interest). Cost: The interest cost is borne by the MSME (via the discount), not by the Government.
Regulatory Basis: It is regulated by the Reserve Bank of India (RBI).