Key Highlights

• Government Clears Rs. 4.37 Lakh Crore, Settling 84 percent Dues to MSEs
• Section 43B IT Act Amendment Targets MSME Payment Delays
• MSME Credit Demand Creates Massive Opportunity for Banks & Fintechs

84 % of outstanding debts owed to micro and small business (MSE) suppliers have been paid by government ministries, departments, and central public sector enterprises (CPSEs). The MSME Ministry's statistics on X indicates that, of the Rs. 5.20 lakh crore owed to MSEs, Rs. 4.37 lakh crore had been paid during May 2020 to March 31, 2025. The MSME Samadhaan portal, which was established in October 2017, provides information on the monthly payments and dues that central ministries and CPSUs make to MSEs.

Payment delays for goods and services purchased from MSE vendors and sellers have long been a problem for the nation's small companies. This makes it more difficult for MSMEs to run their businesses efficiently, which results in a credit deficit of over Rs. 30 lakh crore in the MSME sector.

According to a recent SIDBI survey of MSMEs, despite the government's implementation of many legislative initiatives, sector-specific initiatives are still required to improve MSMEs' access to credit and streamline the loan delivery process.

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Last year, the government introduced a new clause under Section 43B of the Income Tax Act, which is one of the most relevant policy measures to address the problem of delayed payment. The clause only permits buyers to deduct expenses from MSE invoices if they are paid within 45 days of the actual payment year rather than the year the expense was incurred.

According to Debabrata Patra, a former Deputy Governor at the Reserve Bank of India (RBI), the need for formal credit by MSMEs also represents a sizable addressable market for banks, fintechs, and NBFCs.