Delayed payments: MSMEs see 74% jump in rejected applications involving this much amount since March

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December 23, 2020 2:48 PM

Credit and Finance for MSMEs: Applications for delayed payments filed by MSEs are examined by MSEFC of the respective state where the enterprise is based. After examining the case, MSEFC directs the buyer unit to pay the due amount along with interest as per the provisions under the MSMED Act 2006.

MSME Budget 2021 Expectations, Budget 2021 Expectations for MSMEThe government had revised the MSME definition last year as part of the steps taken to help businesses recover from the Covid impact. (Photo source: IE)

Credit and Finance for MSMEs: The quantum of delayed payment applications rejected by Micro and Small Enterprise Facilitation Councils (MSEFCs) has jumped 74 per cent so far since March 2020. MSEFCs, which are established by state governments and facilitate settlement of disputes on delayed payments for micro and small enterprises (MSEs), have rejected 11,042 applications as of December 23, 2020, up from 6,346 rejected applications as of March 4, 2020, according to the government data sourced from delayed payment monitoring system MSME Samadhaan. Moreover, the amount involved in rejected applications during the said period was Rs 1447.17 crore and Rs 2330.58 crore respectively.

Out of 11,042 rejected MSE applications, the majority applications – 2,273 — for recovery of payments were against proprietorship firms followed by 878 against individuals, 866 against other MSME units, 556 against various state governments, 538 against central PSUs, etc. Central ministries and departments have a share of 118 and 151 rejected applications respectively. Applications for delayed payments filed by MSEs are examined by MSEFC of the respective state where the enterprise is based. After examining the case, MSEFC directs the buyer unit to pay the due amount along with interest as per the provisions under the MSMED Act 2006.

Also read: ESDP in 2020: Modi govt’s entrepreneurship development scheme sees nearly 400% jump in trainees

Currently, buyers are mandated to pay MSME dues within 45 days of the acceptance of the goods or services they bought. According to the MSME Ministry, every reference made to MSEFC has to be decided within a period of 90 days from the date of making such a reference as per provisions laid in the Act. Overall, 63,184 applications were filed by MSEs as of December 23, 2020, involving Rs 18,036.22 crore out of which 5,094 applications involving Rs 827.22 crore were disposed.

Meanwhile, according to the data shared by the MSME Ministry in November 2020, the monthly pending dues by the ministries and central public sector enterprises (CPSE) declined from 23.90 per cent in May 2020 to 20.65 per cent in October. This had reflected the increase in the ratio of monthly payments against the procurement made from 76.10 per cent in May to 79.35 per cent in October. While 25 ministries and 79 CPSEs had bought goods worth Rs 2,346.82 crore in May, the number of buyers also went up to 26 ministries, and 100 CPSEs purchasing Rs 5,096.53 crore products and services from MSMEs in October.

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