Companies told to disclose dues to MSMEs

Sources told TOI that the ministry of corporate affairs is expected to notify the rules over the next few days, specifying that disclosures have to made to the registrar of companies within 30 days.

Sidhartha
  • Published On Jan 22, 2019 at 12:11 PM IST
<p>This programme is expected to boost financial inclusion in India as MSME will be their primary focus.</p>
This programme is expected to boost financial inclusion in India as MSME will be their primary focus.
NEW DELHI: The government is mandating disclosure for all companies that have arrears to micro, small and medium enterprises (MSMEs) for over 45 days in its latest attempt to increase transparency and improve the liquidity crunch faced by the employment-intensive sector that has a large share of manufacturing activity in the country.


Sources told TOI that the ministry of corporate affairs is expected to notify the rules over the next few days, specifying that disclosures have to made to the registrar of companies within 30 days.

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In future, every company with unpaid bills to MSME units will have to make half-year disclosures with end of the specified period. “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,” said government sources.

The law provides for an agreement between sellers and buyers and binds it to payment within 45 days. If the buyer fails to settle the dues, it is liable to pay compound interest to the supplier on the amount from the appointed day, or on the date agreed on, at three times of the Bank Rate as notified by the Reserve Bank of India (RBI).

The government is keen to resolve the stress in the MSME sector that claims to have been hit hard by demonetisation and implementation of GST. Problems in the sector was one of the points of conflict between the government and the RBI, which recently allowed a loanrestructuring package for MSMEs. While a package has been announced by Prime Minister Narendra Modi, another scheme is in the works for small traders and exporters.

The government had also set up the TReDS platform to facilitate discounting of both invoices as well as bills of exchange available with banks, which would enable the units to raise funds based on supplies made to companies.
  • Published On Jan 22, 2019 at 12:11 PM IST
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