Module: General Practice
Q169: Scenario: "FinBank Ltd" holds a large portfolio of invoices (receivables) from Power Sector CPSEs on its TReDS platform. To free up capital, it wants to sell these receivables to a Mutual Fund. Under the Budget 2026 reforms, what specific mechanism enables this transaction?
✅ Correct Answer: A
The new mechanism is Securitization as ABS.
Securitization involves pooling financial assets (like invoices) and selling them as a tradeable security.
Previously, financiers on TReDS had to hold the bill until maturity.
Now, they can create a "Pass-Through Certificate" (PTC) or ABS backed by these CPSE invoices and sell them in the secondary market.
This creates a "Re-discounting" market, massively increasing liquidity for MSME financing.
Securitization involves pooling financial assets (like invoices) and selling them as a tradeable security.
Previously, financiers on TReDS had to hold the bill until maturity.
Now, they can create a "Pass-Through Certificate" (PTC) or ABS backed by these CPSE invoices and sell them in the secondary market.
This creates a "Re-discounting" market, massively increasing liquidity for MSME financing.