Finance Ministry asks ministries to reimburse damages deducted from MSMEs during Covid-19

New Delhi, Feb 7 (KNN) The Ministry of Finance on Monday has directed all the ministries to refund performance security/ bid security and liquidated damages forfeited/ deducted from MSMEs during the period of Covid-19 pandemic.

This brings major relief to the MSME sector who are steadily recovering from the jolts of the pandemic.

Seeking a follow-up on the “Vivad se Vishwas-I” scheme announced in the Budget Speech 2023-24 by the Union Finance Minister, the Department of Expenditure has issued an order in this regard.

To provide relief to the MSMEs, Government has in the last two years, announced many benefits for them, the finance ministry said in a statement.

As a follow-up to the relief measures announced earlier, the Ministry of Finance has decided to give additional benefits to MSMEs.

“95 per cent of the performance security forfeited from such firms shall be refunded. 95 per cent of the Bid security (Earnest Money Deposit), if any, forfeited from MSME firms in tenders opened between February 19, 2020, and March 31, 2022, shall be refunded. 95 per cent of the Liquidated Damages (LD) deducted from such firms shall also be refunded,” said the ministry.

LD so refunded shall not exceed 95 per cent of the performance security stipulated in the contract, the statement said.

In case any firm has been debarred only due to default in the execution of such contracts, such debarment shall also be revoked, by issuing an appropriate order by the procuring entity.

However, in case a firm has been ignored for placement of any contract due to debarment in the interim period (i.e. date of debarment and the date of revocation under this order), no claim shall be entertained, the statement added.

Notably, no interest shall be paid on the refunded amount.  (KNN Bureau)