MSME Samadhaan: Recovering Delayed Payments Under the MSMED Act — 45-Day Rule, Interest, and the Facilitation Council
Most MSME loan defaults do not start with bad management. They start with a buyer who did not pay. The MSMED Act gives you a statutory 45-day payment right, punitive interest when it is breached, and a low-cost tribunal in every state to enforce it. Used early, Samadhaan is the cheapest way to stop a receivable problem from becoming an NPA.
- Understand the 45-day rule and exactly when the clock starts
- See how the statutory interest is calculated — and why it is not waivable by contract
- Know the Facilitation Council route from filing to an enforceable award
What this MSME Samadhaan guide covers
This page is for general information. It is not legal, tax or investment advice. Every NPA / SARFAESI / DRT matter is fact-specific — speak to a qualified advisor before acting.
The Delayed Payment Framework
These are the operative provisions borrowers most often need. Verify the current RBI bank rate when computing interest.
| Element | Provision | Effect |
|---|---|---|
| Payment deadline | Section 15, MSMED Act | Agreed date, capped at 45 days |
| Deemed acceptance | Section 2(b) / 15 | Clock runs from delivery if no written objection |
| Interest on delay | Section 16 | 3× RBI bank rate, compounded monthly |
| Contract override | Section 16 | Interest cannot be contracted out |
| Forum | MSE Facilitation Council, Section 18 | State-level, low cost |
| Process | Conciliation, then arbitration | Arbitration & Conciliation Act applies |
| Time norm | 90 days from reference | Statutory expectation |
| Appeal condition | Section 19 | 75% pre-deposit by the buyer |
| Who can file | Registered micro & small suppliers | Udyam registration required |
Why delayed payments become loan defaults
An MSME with a 45-day credit cycle and a buyer paying at 140 days is financing its customer with a bank's working capital. The cash-credit account stays fully drawn, interest servicing slips, and within a quarter the account is in SMA territory. The underlying business is fine; the receivable is the problem.
That is why Samadhaan is a credit remedy as much as a commercial one. Filing references against delinquent buyers changes the conversation with your bank: instead of an unexplained overdue, you can show a documented recovery action with a statutory interest claim attached. Lenders treat that very differently when assessing a restructuring request.
The 45-day rule and when the clock starts
The buyer must pay on or before the date agreed in writing, and where there is no agreement, within fifteen days of acceptance. In no case may the agreed period exceed forty-five days from the day of acceptance or deemed acceptance of the goods or services.
Acceptance is the trigger, not invoicing. Where the buyer raises no written objection within fifteen days of delivery, acceptance is deemed on the day of delivery. Buyers frequently argue about quality or documentation after the fact; the statutory answer is that the objection had to be in writing and timely.
The interest the buyer cannot negotiate away
Where payment is delayed beyond the appointed day, the buyer is liable to pay compound interest with monthly rests at three times the bank rate notified by the Reserve Bank. This is a statutory liability. A purchase order clause saying 'no interest on delayed payment' does not survive Section 16.
Because the rate compounds monthly, the claim grows quickly on aged receivables. On a long-outstanding invoice the interest component frequently exceeds a negotiated discount the buyer would have accepted earlier, which is precisely the pressure the provision was designed to create.
Filing, conciliation, award and enforcement
A reference is made to the Micro and Small Enterprise Facilitation Council of the state, with filing available through the Samadhaan portal. The Council first attempts conciliation between the parties. Where conciliation does not succeed, the Council either takes up arbitration itself or refers it to an institution, and the Arbitration and Conciliation Act governs from that point.
The outcome is an arbitral award, enforceable as a decree. A buyer wishing to challenge it must ordinarily deposit seventy-five per cent of the amount awarded, which removes most of the incentive to appeal purely for delay. In our experience a substantial share of references settle during conciliation once the buyer sees the interest computation and the pre-deposit condition ahead of them.
Udyam registration current, invoices and delivery proof organised, interest computed to date.
Be settlement-ready — a phased payment with interest partially waived often closes quickly.
Enforce as a decree; use it as evidence with your lender when seeking restructuring.
Anonymised outcomes from live files
Details modified to protect client confidentiality; commercial arithmetic preserved.
MSME Samadhaan — answered questions
Turn a stuck receivable into a statutory claim before it becomes an NPA
Share your invoice ageing and the buyers involved. We will compute the statutory interest, check your Udyam position and prepare the reference.