The Micro, small and medium enterprises (MSMEs) are considered to be the backbone of the Indian economy contributing to as much as 45% of the industrial production and 40% of the country's exports. Being the country's largest employers providing employment to around 110.9 million people, the MSMEs have been facing a problem of delayed payments of their bills from the large scale industries.
To provide the MSMEs with the smooth functioning of their businesses, the Union government on the 2nd of November 2018 issued a notice under the MSME Development Act, 2006. The act is framed to ensure the timely and smooth flow of credit to MSMEs and strengthens the provisions related to the delayed payments by mentioning the maximum credit period and the higher penal interest if delayed beyond the given period.
According to Section 15 of the Development Act, the payment to the suppliers shall be made within the date specified in the agreement. However, a maximum period that is allowed under the Act is a period of 45 days from the date of delivery of goods/services.
Further, as per the Section 16 of the Act, if a buyer fails to make the payment within the scheduled date, it will be liable to pay compound interest with monthly rests on the outstanding amount additionally. The interest shall be calculated from the appointed date at three times of the bank rate notified by the RBI. However, if there is any dispute regarding the payment of principal/interest between the supplier and the borrower, reference shall have to be made to the Micro and Small Enterprises Facilitation Council (MSEFC), constituted by the respective state governments.
The ministry of MSME has launched a specialised portal- MSME Samadhaan for facilitating MSMEs to report cases of the delayed payment of bills to draw the attention of their buyers, the facilitation councils and the Ministry of MSME. They can file an online application that will later be reviewed by the facilitation councils and concerned central ministries, state governments and central public sector enterprises for the actions required.
With these initiatives taken, the MSMEs can find themselves strengthened to file a complaint against the large scale industries. This would not only able them with the smooth running of the business but also give them a chance to stand upright in the competition with the other industries.
For more details visit https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC_Welcome.aspx
