The Trade Receivables Discounting System (TReDS) functions as a digital backbone for MSME financing in India. Which of the following statements correctly identifies the status of the 'Factoring Unit' once a financier's bid has been accepted by the MSME seller?

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Economics · Banking and Financial Institutions

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Correct answer

It results in an automatic assignment of the debt to the financier, making the buyer legally bound to pay the financier on the due date.

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Answer 1

The Factoring Unit is merely a non-binding proposal, and interest rates can be changed later.

Answer 2

It results in an automatic assignment of the debt to the financier, making the buyer legally bound to pay the financier on the due date.

Answer 3

The Factoring Unit requires manual physical approval from the Ministry of Finance before disbursement.

Answer 4

Acceptance of the bid automatically dissolves all existing term loans of the MSME seller.

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