Thursday May 12, 2022

Credit and Finance for MSMEs: Traders at Delhi-based Naraina Loha Mandi, one of North India’s prominent hubs for iron and steel trading represented by Naraina Iron and Steel Merchants’ Welfare Association, are having over Rs 100 crore stuck in delayed payments from various buyers. “By a conservative estimate, the money stuck would be more than Rs 100 crore for traders based in Delhi. However, we don’t have the exact data on delayed payments,” Rajesh Aggarwal, CEO, Shiv Shakti Iron Traders and association’s General Secretary told Financial Express Online. The association represents over 700 traders.

Aggarwal said traders have recourse to civil courts only where resolution is a time-taking process. “If there is no payment on the due date, then the trader has to go to civil courts and wait years for resolution. If there is a post-dated cheque that gets bounced, then also one has to go to court only with no quick solution,” he added.

Currently, Aggarwal has Rs 60 lakh stuck in payments in his business from a buyer running a steel fabrication business based in Delhi. “Apart from that, there are a few lakhs that we have been losing in business from past few years due to delayed payments from different buyers. Overall, lack of timely payments hit business growth that eventually impacts our annual turnover of around Rs 120 crore by approximately 20 per cent even as we have to continue repaying bank loan,” he added.

The association is now beginning to create awareness around filing delayed payment applications on the MSME Ministry’s Samadhaan portal. “Traders weren’t part of MSME category till mid last year and hence weren’t allowed to register on the portal,” said Aggarwal. In July last year, the government had reinstated wholesale and retail traders under the MSME definition to give them access to the benefits of priority sector lending. Wholesalers and retailers were excluded from the MSME ambit back in 2017. 

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Importantly, Aggarwal wasn’t aware of the Micro & Small Enterprises Facilitation Councils (MSEFCs) set up in states and union territories to deal with cases of delayed payments of micro and small enterprises (MSEs). According to the MSME Ministry, the MSEFC of the state after examining the case filed by the MSE issues directions to the buyer for payment along with interest. The buyer is liable to pay compound interest with the monthly rests to the MSE on the amount at three times the bank rate in case he/she fails to make payment within 45 days of the acceptance of the goods/service.

According to the Samadhaan portal, 1.11 lakh delayed payment applications involving Rs 28,714 crore have been filed by MSEs so far since October 30, 2017, when the portal was launched. Out of total applications filed, 15,623 cases amounting to Rs 2,785 crore were disposed as of May 12, 2022.


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