The central bank has initiated discussions with market participants on this aspect which will help MSMEs who get squeezed all the time by the larger buyers who also seek longer credit period, thus hampering cash flows of the small and medium enterprises.
RBI Governor Raghuram Rajan told the Nasscom India Leadership Forum that it would be better for the MSMEs if they could sell their claims on the large buyers in the market.
"If we can set up a trade receivables exchange with fully automated acceptance of bills and their auction, we can reduce transaction costs considerably," he said.
“The RBI has been discussing with market participants on how to do this, and, in a very short while, we should have the structure in place,” he said adding that the key was to reduce transaction costs by automating every aspect of the transaction.
Once the cost is reduced and volume of business rises, financial inclusion can be achieved. “One of the problems with MSMEs is that they get squeezed by large buyers, who delay their payments when they are tight on credit, and they start by delaying payments to the small suppliers, who have very little bargaining power.
“Once the MSME sells its claim on the large buyer in the market, the MSME would get its money quickly while the market would get a claim on the better-rated large buyer instead of holding a claim on the MSME,” Rajan said.