MSMES Get CGTMSE Cover on TReDS
The new guarantee mechanism on three TReDS platforms aims to reduce financiers’ credit risk and expand invoice-based working capital for eligible Micro and Small Enterprises.
The Ministry of Micro, Small and Medium Enterprises has rolled out Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) guarantee coverage for invoice discounting through the Trade Receivables Discounting System (TReDS), following the Union Budget 2026-27 announcement.
The CGTMSE portal has been integrated with the TReDS ecosystem, with guarantee coverage now available on three platforms — M1xchange, RXIL and DTX (KredX).
The mechanism is designed to reduce credit risk for financiers and encourage greater financing of eligible receivables of Micro and Small Enterprises. This can allow eligible businesses to raise working capital against unpaid invoices.
Under the new provision, both the buyer and seller must qualify as Micro or Small Enterprises. CGTMSE will provide guarantee cover of 75 per cent of the amount in default, with maximum exposure of ₹10 crore for an MSE buyer and ₹2 crore for an MSE seller on a revolving basis.
The integration also digitises the guarantee process for financiers. Invoice eligibility can be checked and CGTMSE coverage applied for through the platform. The system then enables automatic calculation of the guarantee fee, fee debit and generation of the cover note and corresponding invoice.
TReDS is an RBI-regulated electronic platform that enables financing and discounting of MSME trade receivables from corporate buyers, government departments and public sector undertakings through competitive bidding by financiers.
According to the Ministry of MSME, invoice discounting through TReDS increased from ₹40,000 crore in FY2021-22 to ₹3.5 lakh crore in FY2025-26.
The ministry said the guarantee mechanism is intended to improve access to timely formal credit for Micro and Small Enterprises while helping address delayed payments and working-capital constraints.