Introduction of NTREES Platform

Bills discounting, invoice discounting & factoring have been a very common & traditional source of working capital finance. However, most of the banks use physical form of discounting, which requires high manpower, involves lots of paper work and relatively bigger office space. This results in higher transaction cost and high transaction turn-around-time. The process is also prone to operational & transactional risks.

Under the existing mode of receivable financing, (like, cash credit, bills discounting, invoice discounting & factoring etc), the credit risk is taken on the supplier’s financial strength and not on the buyers. Normally, the suppliers are not so financially strong and credit worthy vis-a-vis their big corporate buyers. It is therefore desirable to take benefit of the credit-worthiness of the big corporates to assist the suppliers, particularly MSMEs in the form of time & cost effective reverse discounting mechanism.

E-discounting is not a new concept. Some of the banks / FIs have already been operating discounting / factoring on the electronic mode. However, there has been no uniformity in operations, as it may differ from bank to bank & purchaser to purchaser and they do not work on a common platform.

In the current economic scenario, one of the problems faced by the suppliers, particularly MSMEs is the liquidity constraints due to longer working capital cycle, particularly, relating to receivables. To address the problem, SIDBI & NSE have joined hands to set up “NTREES”, an electronic platform for e-discounting of accounts receivable of suppliers, particularly MSMEs. It is expected that the proposed initiative would go a long way to address the liquidity issues of the suppliers, particularly, MSMEs in an effective and efficient manner and in the bargain would become a self-sustaining platform.