Q.What is meant by the problem of "delayed payments" faced by MSMEs? What remedy does the law provide?

A supplier can be perfectly efficient and still be pushed into a cash crunch by a buyer who simply doesn't pay on time — the law now puts a real cost on that delay.

"Delayed payments" refers to the common problem where a large buyer takes far longer than the agreed credit period to pay an MSME supplier for goods or services already delivered. Because MSMEs typically operate with thin working-capital margins, such delays can force the small unit itself to borrow at high cost, or to delay its own payments down the supply chain, spreading financial stress.

Recognising this as a structural, not incidental, problem, the MSMED Act, 2006 builds in a specific legal remedy (Sections 15 to 24 of the Act): a buyer must pay an MSME supplier within the period agreed in writing, or, if no period is agreed, within forty-five days of acceptance of goods or services. If the buyer fails to pay within this period, it becomes liable to pay compound interest, with monthly rests, at three times the bank rate notified by the Reserve Bank of India — a deliberately punitive rate meant to discourage delay. If the dispute is not settled, the supplier can approach the state-level Micro and Small Enterprises Facilitation Council, which can conduct conciliation …