NEW DELHI, Feb. 1 -- The government on Sunday proposed creating a secondary market for MSME invoices by allowing these receivables to be packaged as asset-backed securities. This is among a slew of reforms to the Reserve Bank of India-run Trade Receivables Discounting System (TReDS).

Presenting the Union Budget for 2026-27, finance minister Nirmala Sitharaman proposed to "introduce TReDS receivables as asset-backed securities, helping develop a secondary market, enhancing liquidity and settlement of transactions."

The proposal aims to broaden funding avenues for micro, small and medium enterprises (MSMEs) by turning verified invoices into tradable instruments, enabling banks and non-banking financial companies (NBFCs) to recycle capital...