Delayed Payments to Micro and Small Enterprises as per as per MSME Act 2006

The MSME Act 2006 has provisions to address the problem of delayed payments to MSEs. Section 16 of the Act states that if a buyer fails to make payment to a supplier within 45 days of the agreed date of payment, the buyer shall be liable to pay compound interest to the supplier at three times the bank rate notified by the Reserve Bank of India.

The following are the key provisions of the MSME Act 2006 on delayed payments to MSEs:

  • The buyer is required to make payment to the supplier within 45 days of the agreed date of payment.
  • If the buyer fails to make payment within 45 days, the buyer shall be liable to pay compound interest to the supplier at three times the bank rate notified by the Reserve Bank of India.
  • The interest shall be payable from the appointed day or, as the case may be, from the date immediately following the date agreed upon.
  • The supplier may refer the matter to the Micro and Small Enterprises Facilitation Council (MSEFC) for adjudication.
  • The MSEFC shall decide the matter within 90 days of the date of reference.

MCQs on Delayed Payments to MSEs under MSME Act 2006

  1. The buyer is required to make payment to the supplier within __________ days of the agreed date of payment.
    • 30 days
    • 45 days
    • 60 days
    • 90 days
    • The correct answer is 45 days. Section 16 of the MSME Act 2006 states that the buyer is required to make payment to the supplier within 45 days of the agreed date of payment.
  2. If the buyer fails to make payment within 45 days, the buyer shall be liable to pay __________ to the supplier.
    • Simple interest
    • Compound interest
    • Interest at the bank rate
    • No interest
    • The correct answer is compound interest. Section 16 of the MSME Act 2006 states that if the buyer fails to make payment within 45 days, the buyer shall be liable to pay compound interest to the supplier at three times the bank rate notified by the Reserve Bank of India.
  3. The interest shall be payable from the __________.
    • Date of purchase
    • Date of agreement
    • Appointed day
    • Date of default
    • The correct answer is appointed day. The appointed day is the date on which the payment is due. If the buyer fails to make payment on the appointed day, the interest shall be payable from that day.