Crisil SME Tracker: With PSUs on board, TReDS may ease MSME liquidity woes

CRISIL's analysis shows that while average receivables days and cost of funds of MSMEs are declining, they still remain high

The government’s recent fiat asking major public sector undertakings (PSUs) to register on the TReDS platform should come as a big relief for their MSME suppliers. CRISIL’s analysis of 3,000 small manufacturers in infrastructure, engineering and capital goods sectors between fiscal years 2015 and 2017 shows delays in receivables are endemic, which squeeze liquidity and force them to resort to high-cost funds that erode profitability.

For financiers on the platform, the high credit ratings of major PSUs, which are mostly Central government enterprises, offer a source of comfort. Earlier, corporates, including PSUs, have been chary of being on TReDS to