: Government of Goa joins TReDS as buyer helps 250 MSMEs & clears Rs. 575 cr funds; sets example for other states #FinanceIndia #StockMarketNEWS Government of Goa joins TReDS as buyer helps 250 MSMEs

@StockMarketNEWS Fri 10 Dec, 2021

Posted in: #FinanceIndia #StockMarketNEWS

Government of Goa joins TReDS as buyer helps 250 MSMEs & clears Rs. 575 cr funds; sets example for other states #FinanceIndia #StockMarketNEWS
Government of Goa joins TReDS as buyer helps 250 MSMEs & clears Rs. 575 cr funds; sets example for other states New Delhi, 7 Dec (KNN) The government of Goa became the first state government to partner with Receivables Exchange of India Ltd (RXIL) to get onboarded as a ‘Buyer’ on TReDS platform which is automatically linked with Government’s e-Marketplace (GeM).

This initiative was taken by the government of Goa in view of struggling condition of MSMEs and the low tax collection.

Hence it took such an action, as ‘buyer participants’, state agencies have a one-stop portal to clear pending invoices, as published in Mint.

This addresses two issues facing MSMEs. One, it enables the prompt encashment of receivables. Two, factors have no recourse to MSMEs if they don’t get paid on the due date. The credit risk is borne by factors, opined V. Anantha Nageswaran, visiting professor of Krea University & Ketan Gaikwad, MD & CEO of Receivables Exchange of India Ltd.

Once adopted, Goan MSME sellers received the cash flows they needed on time, while the government, as the buyer, was able to make payments on favourable terms and avail the support of financiers, including banks, to ensure timely payments to MSMEs in need.

The Goa government reached out to RXIL as early as August 2020, and it requirements were straightforward, stated Gaikwad.

“It was looking for a way to both improve the liquidity conditions of MSMEs facing lockdown hardships and to fulfil its invoice obligations,” added Gaikwad.

The Goa government’s first transaction on the network took place in October 2020, and since then, over INR 575 crore of MSME funds have been cleared via the TReDS platform, helping over 250 MSMEs and delivering a valuable additional source of working capital to small businesses.

Being on the TReDS platform helps Goa’s government get extended payment terms, up to 180 days. Multiple financiers allocate limits and bid on invoices at competitive rates. It enables timely settlement of MSME dues without immediate expenditure from the state’s treasury. Finally, automated repayments to financiers are triggered on due dates.

All the state governments should analyse this process and look into it in order to maintain their credit standing with RBI and the Union government.

The gap between MSMEs and finance remains wide, despite of government’s desperate efforts such as the MSME Development (MSMED) Act of 2006, MUDRA loans and the Emergency Credit Line Guarantee Scheme of the Centre.

However, the interventions that we need is closely related to the recent decisions made by government of Goa to help MSMEs in their state.