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MSME ministry to review delayed payment issues: Secretary
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Namrata Kath Hazarika | 31 Oct, 2012
The MSME Ministry is reviewing the issues of delayed payments faced by Micro, Small and Medium Enterprises (MSMEs) in the country and suggested that MSMEs need to charge high rate of interests in case big companies fail to pay back the amount assured on time.
"These provisions are there in the law and we will review it with the state governments to enforce them strongly. And, if there is a delayed payment then he (the large companies) has to pay three times the normal rate of interests," said the Secretary, Ministry of MSME, Vivek Rae in the sidelines of the CII Global MSME Summit in New Delhi on Tuesday.
He added that MSME Felicitation Councils are set up in all the State Governments, they will work and resolve the matter. "We will talk with them and work with them and also review how they are doing and see how they can further strengthen and energized the problem between a large company and small company. But it is supposed to go to the felicitation council. And, they will arbitrate on that to settle the problem. If it does not get settle then it will go to the arbitrator," Rae mentioned.
Delayed payments have been a major roadblock for the growth of MSMEs in the country, which requires immediate attention. It is not only a problem in India but in other countries as well, he added.
According to the recent survey on SMEs, it said that it took 16 to 60 days to receive their dues from large firms.
"The review has not been taking place till now. The MSME Felicitation Council is all over the country under the act (MSME Act), they are supposed to felicitate payments otherwise in case of delayed payments then you ( large companies) are supposed to pay higher interests," Rae said.
Also, all the large companies are required to declare in their annual report on delayed payments, which will be helpful, the MSME secretary added.
Further when asked about providing collateral-free loans to MSMEs by banks, Rae opined, "If banks are asking we have to talk to the banks. There should be no collateral up to Rs. 10 lakhs. We are talking to Department of Financial Services (DFS) to tell banks about this."
The MSME Ministry has already placed the matter before DFS and has twice met the department so that the issue can be discussed with the banks in order to provide collateral free loans to the MSME sector, he added.
The MSME sector employs 60 million people across 26 million enterprises at the moment. It constitutes 45 percent of India's manufacturing output. The sector is expected to contribute 25 percent to GDP in the next decade from the present 8 percent and create additional 100 million jobs. It has 40 percent contribution in the country's exports as well.
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Courts are not recognising the spirit of MSMED Act.
R.Rajanikanth | Mon Apr 30 11:12:15 2018
MSMED councils around the country should have standard procedure and standard order format acceptable to courts.This acceptance is to avoid staying of cases without insisting for 75 percent.The courts are staying the order and keeping quite for years.When the interest piles up the same court says the amount is huge,eventhough the act says for compound interest with monthly rests.
bills getting cleared 16 to 60 days - survey got it wrong
Bhagawath Prasad | Fri Apr 27 15:52:13 2018
Sir, it appears like survey has not got correct data , it must be 1 month to 6 months ( with some companies it's much more)One of the primary reason is that their internal accounting system,look at one scenario : Inorder to get their procurement in time , they alert vendor to supply with mail indent ( purchase request) post which PO to release 10 days to 20 days , if supplies to go for third party directly , Generating GR numbers is a big task for their officers , that me take a month or two post which 30 to 60 days for clearing bills. In my opinion , government should look at GST bill raised and ask banks to fund the same and collect suggested interest from buyer company by sending debit note to them with their transaction fee , it's a business for banks , vendor need not fear about annoyed customer , at the same time large businesses will start readjusting their internal mechanism to clear bills within 15 days bill raised
msmed act 2006
shekhara S BB advocate | Sat May 30 11:35:37 2015
This is an act without teeth.It may pass decree but cannot implement. Legislatures not competent to realize that without implementation acts have no validity.
Delayed Payment to MSME Payment of interest
Subhash Mahajan | Mon Apr 29 08:38:30 2013
The MSME facilitation council should be vested with Judicial powers and they may be authorised to attach the bank accounts of the defaulters so that the order passed by the council is implemented.
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Re: Delayed Payment to MSME Payment of interest
C p jain | Thu Apr 26 18:08:21 2018
Defolter name displayed in RBI website
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Non payments of dues
Rajesh Shenoy | Mon Nov 26 12:00:12 2012
We are one of the micro industries who are facing the dire consequence of nonpayment of dues by one of the large companies to the tune of 4 lacs for the last 3 fys .We wiish to utilise this platform to air our grievance over here.Please advise us as what you can do to assist us in recovering our dues. Please do the needful
Delayed payment
Vinod jain. Chennai | Sat Nov 17 12:25:03 2012
Felicitation council pass the decree to pay the amount but cannot get the amount. If company is not paying they cannot do anything. It is suggested to go to civil court to get the amount. What is the remedy.
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Re: Delayed payment
C p Jain | Thu Apr 26 18:13:04 2018
After decree if party not paid money immediately than Govt. Can arrange 75 present amount from bank loan against decree
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THE PLIGHT OF MICRO INDUSTRIES
Chand Rai | Wed Nov 7 07:24:36 2012
Besides doing away with collateral asked for by banks and the question of delayed payments their is also the problem of non-payments by big companies. Micro industries in particular cannot afford to lose a single penny. Furthermore, some policies of the Director of Industries are not pragmatic causing a lot of heartburn. The Ministry must recognise that Micro Industries in particular are like infants & they need hand-holding or else they'll become 'dropouts'. They are at the bottom of an industrial pyramid.
The interpretation of tax laws, both direct & indirect, is a Sudoku puzzle which even the tax departments find it difficult to comprehend on many occasions. It should be presented in FAQ format without the legal jargon attached. Notifications are issued at frequent intervals which do not reach the Micro Industries. Their has to be a way to address this problem. Ambiguity in any manner should be removed to minimise possibility of wrong interpretation of tax laws.
Inspection / Audit of tax returns should be in a remedial format & not penal. Government should give ample opportunities to tax payers to revise / correct their returns. As of now most industries views the government inspectors as dragons. Micro Industries in particular do not have the means to take on the government when they feel they are on the right side of law. This leads to graft & thus an endless battle of give & take begins. The loser is the government which does't earn the revenue they should.
Prompt payment
Jacob T. Mathew | Wed Nov 7 07:18:32 2012
The Delayed Payment Act is a great facility now available to the MSME units. But it is not quite practical for MSME units to drag their running clients to the Felicitation Council as it may lead to losing the client. The Act may be modified to stipulate the buyers pay their MSME suppliers within 30 days. The payments to MSMEs may be treated at Par with statutory payments like EPF and ESI dues and its compliance may be certified in the Balance Sheet by the Statutory Auditor. Certain percentage of the purchases may be made from the MSME sector mandatory on the part of large buyers. These facilities are being enjoyed by Small Businesses in the US and the UK
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