RBI pitches in for bringing in legislative process to mandate PSUs for timely payments to MSMEs
RBI pitches in for bringing in legislative process to mandate PSUs for timely payments to MSMEsNew Delhi, June 12 (KNN) Recovery of dues is a major challenge for the MSMEs, said Reserve Bank of India (RBI) deputy governor SS Mundra pressing for the need to bring in legislative process to make it mandatory for large corporates and public sector units to compulsorily register on (receivables) trading platform so that the payment of receivables on due date becomes legal obligation.
Delayed payments are one of the major concerns of the MSME suppliers. According to a recent report, payments of Rs 70,000 crore of the SMEs are stuck with the public sector units.
Since the SME payment data remains scattered, it’s difficult to estimate the total amount of dues the PSUs owe towards the sector. However, the SMEs continue to pay heavy interest rates for bank loans and the Financial institutions are quite hostile towards SMEs, and any non-payment results in serious penalizations including listing under the Non-Performing Assets (NAP) category.
Talking about setting up of a trading platform for receivables, Mundra said, "We have already invited applications and quite a few applications have been received by RBI. They are currently under scrutiny.
Receivables are basically bills or monetary obligations owed to a company by its customers. If such trading platform is set up, then it would provide cash flow to MSME against such receivables. It will help them overcome cash crunch.
"I would urge and hope that somehow if legislative process is brought in which makes mandatory for large corporates, public sector units and the government departments to compulsorily register on (receivables) trading platform so that when the small and medium units has done any supply to any of these institutions then the payment of receivables on due date becomes legal obligation," he said.
"I believe recovery of dues is a major challenge for MSME so if it can become a legislative process or part of statute it will go a long way in supporting the sector," RBI deputy governor said. (KNN Bureau)