MSME Dues Repayment Being Monitored, Says Nirmala Sitaraman
- ByAyushi Ray | July 27, 2021
MSME dues repayment being monitored, says Nirmala Sitaraman. She added in a statement, “The issue has been reviewed over the past year from the point of view of the central government and the various departments which owe money to the MSMEs, inclusive of Public Sector Undertakings (PSUs) and it has been decided by the Central government that these payments will be made as per the standard rule within 45 days.” Sitharaman retweeted that the Central government has taken the position that any pending payment to MSMEs will have to be given in 45 days and that she is personally monitoring it. According to a Reserve Bank of India report, MSMEs face problems of delayed payments because of low bargaining power not only from corporates but also from PSUs and the government agencies, both Central and State which adversely affects their working capital cycle/requirements and ultimately affects their operational efficiency.
Earlier this year, Ex-MSME minister Nitin Gadkari had also said that delayed payment is the major problem faced by the MSMEs, and that a law should be made to clear all dues within the time frame of 45 days. He added that the Indian government is making a proposal to introduce legislation, mandating PSUs to settle the dues within the said time frame. In the parliament, Sitharaman also emphasised the use of the Trade Receivables Discounting System (TReDS) platform which RBI introduced in 2014 where these MSMEs payments can be discounted. TReDs is an electronic platform where receivables of MSMEs drawn against buyers (large corporates, PSUs, Government Departments, etc.) are financed through multiple financiers at competitive rates through an auction mechanism.
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