MSMEs: Finance Ministry to levy 1% interest on Late Payment in Government E-Marketplace (GeM)

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Ministry of Finance (“MOF”) vide Office Memorandum dated July 03, 2020, on prompt payment to vendors specially the MSME vendors. The intent of the Government in this regard has been articulated under the Aatmanirbhar Bharat pronouncements. For procurements made under rule 149 Of GFRs 2017. buyers are mandated to make payments within 10 calendar days after generation (including auto-generation) Of Consignee Receipt and Acceptance Certificate (CRAC) in the GeM

In order to promote greater discipline and timeliness in payment to vendors, it is decided that whenever a CRAC is auto-generated or issued by a buyer and payment is not made 10 days thereafter, the buyer organization will be required to pay penal interest @ 1% per month for the delayed payment beyond the prescribed timeline till the date Of such payment. The charge Of interest shall be prorated for the period of delay. (For example, if CRAC is generated on the 1st day of a month and payment is made by the buyer organization on the 20th day of the month, interest for 10 days will be charged. The penal interest will be 10/30 multiplied by 1% i.e. 0.33%). The month may be taken as 30 days in all cases.

The amount collected in this regard shall be deposited in an account maintained by GeM. This interest will not be paid to the vendor and will be kept by GeM in a separate account which will be used only for the education of sellers/ buyers etc., or other purposes related to GeM or public procurement with the prior approval of Department of Expenditure, This shall not cover any other interest payable to vendors under any law or contractual obligations, which will be over and above the interest as charged above.

Note: The above conditions will be applicable for all procurements made from October 01, 2020.

The Notification can be accessed at: