RAS question
TReDS was made mandatory for which entities in Budget 2026?
Correct answer: (B) CPSEs.
In Union Budget 2026-27, TReDS was proposed to be made mandatory for Central Public Sector Enterprises' transaction settlements.
Explanation
TReDS, or the Trade Receivables Discounting System, is an electronic platform for financing or discounting MSME trade receivables through multiple financiers. The PIB explainer says these receivables may be due from corporates and other buyers, including government departments and PSUs. In the Union Budget 2026-27 context, the key proposal was narrower: TReDS was to be mandated for Central Public Sector Enterprises' transaction settlements. The purpose, as stated in the source, was to enhance MSME liquidity. The same Budget discussion also mentioned a credit guarantee mechanism for invoice discounting, linking GeM with TReDS for quicker financing, and treating TReDS receivables as asset-backed securities to develop a secondary market for transaction settlement.
Why the other options are wrong
- (A) Private companies may be buyers on TReDS, but the Budget proposal cited here specifically mandates TReDS for Central Public Sector Enterprises' transaction settlements.
- (C) Banks or other financiers participate in discounting receivables on TReDS, but the mandate in the Budget was not imposed on banks.
- (D) State PSUs fall under the broader PSU category as possible buyers, but the stated Budget proposal names Central Public Sector Enterprises, not State PSUs.
Concept
This tests MSME finance and digital business-infrastructure reforms, especially how the Union Budget uses platforms such as TReDS to improve working-capital flow. It recurs in RAS because MSME liquidity, public-sector payments and ease-of-doing-business reforms sit at the intersection of economy and governance.