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      Question

      According to the MSMED Act, 2006, if a buyer fails to

      make payment to an MSME supplier within the stipulated period, what rate of interest is applicable on the delayed payment?
      A Two times the RBI Bank Rate Correct Answer Incorrect Answer
      B Three times the RBI Bank Rate Correct Answer Incorrect Answer
      C Four times the RBI Bank Rate Correct Answer Incorrect Answer
      D Bank Rate + 5% Correct Answer Incorrect Answer
      E Bank Rate + 3% Correct Answer Incorrect Answer

      Solution

      The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 has strict provisions to ensure timely payments to MSMEs: • Payments must be made within the agreed period (or within 45 days, if not specified). • In case of delay, the buyer is liable to pay compound interest with monthly rests at a rate of three times the Bank Rate notified by the Reserve Bank of India (RBI). • This measure ensures financial discipline and protects MSMEs from liquidity stress caused by delayed payments.  Correct Answer: Three times the RBI Bank Rate (Option 2)

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