As per news reports, the Narendra Modi-led government is considering to make it mandatory for all companies to disclose their dues to micro, small and medium enterprises (MSMEs) for over 45 days to address the concerns of small businesses over delayed payments that create serious cash flow challenges for them.
Reports also said that the ministry of corporate affairs is likely to notify guidelines in a couple of days, emphasising that disclosures have to be made to the registrar of companies within a month. In fact, companies with arrears to MSME units will have to make half-year disclosures by the end of the specified time.
According to a statement in the press, “the rules are in line with what is prescribed in the law governing MSME sector. It is being implemented now to put pressure on companies to pay up.”
It is said that there will be a pact between sellers and buyers, and it will be linked to payment within 45 days now. In fact, the reserve Bank of India notified that, if the buyer delays to settle the dues, it is accountable to pay compound interest to the supplier on the amount from the appointed day at three times of the bank rate as.
It has been noted that fund flow to MSMEs and giving aid to the sector was one of the main points of difference between the finance ministry and the central bank under former governor Urjit Patel.
Moreover, in November 2018, Prime Minister Narendra Modi had announced a few measures to make it easier for MSME to access credit, including loans of up to Rs 1 crore in 59 minutes, and easier compliance with environmental laws.