Delayed MSME payments: Rate of disposed cases remains low; govt portal helps settle this much amount

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Published: April 27, 2020 8:29:28 PM

Credit and Finance for MSMEs: MSME Samadhaan, launched in October 2017 by then MoS MSME Giriraj Singh, has facilitated the disposal of 3,145 cases filed in the MSE Facilitation Council.

NBFC, MFI, TLTRO auction, Sidbi, Nabard, direct liquidity window, moratorium, MSMEsThe amount payable in the number of cases filed by MSMEs stood at Rs 4,112 crore.

Credit and Finance for MSMEs: Two-and-a-half years after the government launched delayed payment monitoring portal MSME Samadhaan, to fastrack settlement of MSME dues by central ministries, departments, central public sector enterprises and governments, the number of cases settled remains low at 24 per cent. The portal, launched in October 2017 by the then MoS Giriraj Singh, has facilitated the disposal of 3,145 cases so far out of 13,091 cases filed in the past around 30 months in the MSE Facilitation Council, according to the data available on the monitoring platform. The buyers are currently mandated to make payments to suppliers within 45 days of the acceptance of goods or services. In case of failure of payments, every case filed in the facilitation council “shall be decided within a period of 90 days from the date of making such a reference.”

The amount payable in the number of cases filed stood at Rs 4,112 crore while Rs 598 crore has been settled through the disposed of cases. Delay payments from buyers have been among the major challenges faced by MSMEs leading to cash flow problems. This further pushes small businesses towards seeking credit from banks and eventually ends up in a debt trap.

Also read: Corona carnage: Whopping 74% small businesses, startups may shutdown, scale down in next few months

To help small businesses tide over credit issues, MSME association World Association for Small and Medium Enterprises (WASME) had recently written to the Prime Minister Narendra Modi for clearing delayed payments within 15 days. “All government departments should clear all pending payments to MSMEs within 15 working days. MSMEs should also be granted additional loans on-demand or existing limits should be increased to help them tide over the liquidity mismatch,” Sanjiv Layek, Executive Secretary, WASME had told Financial Express Online. Moreover, around more than 60 million MSMEs are “in real danger” with “more than 92 per cent drop in domestic sales compared to the same time last year, it said.

Nonetheless, to provide some relief to small businesses, Finance minister Nirmala Sitharaman had last month announced that government would bear the 24 per cent contribution of both employee and employer combined to the Employees’ Provident Fund for the coming three months. The minister had also announced raising the default threshold by MSMEs from Rs 1 lakh to Rs 1 crore to prevent triggering of insolvency proceedings against small businesses.

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