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?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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