Penalty for late repayment of loan to msme creditors

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CA Radhika Pai (Querist)

19 August 2013 Dear All,
I have a query regarding as to what is the penalty interest if repayment to MSME creditors is not made within the stipulated time period ? I have read the MSME Act, which says that penalty interest is thrice the interest rate as decided by the RBI at that time. I have searched on RBI site, but I am not getting the same. Might be that I am searching in a wrong way. So, I request to get an answer from experts that what is the penalty interest rate for late repayment of loan to MSME creditors ?

Thanks in advance

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

19 August 2013 "Interest Rate" = "Bank Rate" . Please check the words and search Bank Rate at the RBI site.
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Please also go thorough-

https://wirc-icai.org/wirc_referencer/Other%20Law/Micro%20small%20and%20medium.htm

CA Radhika Pai

CA Radhika Pai (Querist)

19 August 2013 Sir, I referred to your link which says that penalty for late repayment to MSME creditors is three times the bank rate as notified by RBI.I searched for bank rate instead of interest rate.I got the link for penal interest rates on short fall in reserve requirements, which are specifically linked to the bank rate.
Please can anyone tell me the exact penalty for late repayment to MSME creditors.
https://rbi.org.in/Scripts/NotificationUser.aspx?Mode=0&Id=8241#an

Kumar

Kumar (Expert)

19 August 2013 It is 10.25% as given in the link.
But this rate has to be applied for delays from its effective date.

In other words rates applicable at the time of delay needs to be considered

Recent changes in bank rates is as follows:

Date Bank Rates
15.03.2012 9.50%
08.06.2012 9%
17.09.2012 9%
18.12.2012 9%
29.01.2013 8.75%
19.03.2013 8.50%

The current rate is available on the home page of RBI websit

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)

20 August 2013 In case of delayed period as on today you have to charge interest @10.25x3=30.75% p.a.
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If you take monthly rate then 30.75/12= 2.5625% per month.
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