Module: General Practice
Q42: Consider the following regarding the "Delayed Payments" protection for MSMEs:
Assertion (A): Under the MSMED Act, 2006, a buyer is liable to pay compound interest to a Micro or Small Enterprise if payment is not made within 45 days of acceptance.
Reason (R): The interest rate payable is fixed at three times the Bank Rate notified by the Reserve Bank of India.
Reason (R): The interest rate payable is fixed at three times the Bank Rate notified by the Reserve Bank of India.
✅ Correct Answer: A
The MSMED Act acts as a shield for Micro and Small Enterprises (MSEs) against delayed payments.
The Assertion is true because Section 15 mandates payment within 45 days (if no agreement exists) or the agreed period (maximum 45 days), and Section 16 mandates interest liability for delays beyond this period.
The Reason is true because Section 16 specifically sets the penal interest rate at three times (3x) the Bank Rate notified by the RBI, compounded at monthly rests.
The Reason correctly explains the Assertion by specifying the statutory calculation method for the liability mentioned.
It is important to note that this protection is available to Micro and Small enterprises, not Medium ones.
The Assertion is true because Section 15 mandates payment within 45 days (if no agreement exists) or the agreed period (maximum 45 days), and Section 16 mandates interest liability for delays beyond this period.
The Reason is true because Section 16 specifically sets the penal interest rate at three times (3x) the Bank Rate notified by the RBI, compounded at monthly rests.
The Reason correctly explains the Assertion by specifying the statutory calculation method for the liability mentioned.
It is important to note that this protection is available to Micro and Small enterprises, not Medium ones.