Buyers to pay interest for late payment on GeM portal

NEW DELHI: The government department and agencies, procuring goods and services from government e-marketplace (GeM) platform, will have to pay one per cent interest on late payments made to vendors, according to the department of expenditure.
However, the interest amount will be deposited in an account maintained by GeM.
The government has been repeatedly emphasising the need for prompt payment to vendors specially the MSME vendors.
For procurement made on (GeM), buyers are mandated to make payments within 10 calendar days after generation (including auto generation) of consignee receipt and acceptance certificate (CRAC) on 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 organisation will be required to pay penal interest @1 per cent per month for the delayed payment beyond the prescribed timeline till the date of such payment,” it said.
The charge of interest will be prorated for the period of delay. For example, if CRAC is generated on the first day of a month and payment is made by the buyer organisation on the 20th day of the month, interest for 10 days will be charged.The penal interest will be 10/30 multiplied by 1 per cent i.e. 0.33 per cent. It added that month may be taken as 30 days in all cases.
Further, the department in an office memorandum said that the amount collected in this regard will 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 or other purposes related to GeM of public procurement with the prior approval of the department of expenditure,” it added.
The conditions will be applicable for all procurement made from October 1 this year.
The office of finance minister Nirmal Sitharaman tweeted “in order to promote greater discipline and timeliness in payment to vendors, especially #MSMEs, the government has issued an order to levy interest on late payment to vendors on the government e-marketplace”.

GeM, launched by the commerce ministry in August 2016, is the national public procurement portal for an online, end-to-end marketplace for open, efficient and transparent procurement of goods and services by central and state government organisations.
Currently, government departments, ministries, public sector units, state governments, and Central Armed Police Forces are allowed to carry out transactions through this portal.
The portal provides a wide range of products from office stationery to vehicles. Automobiles, computers and office furniture are currently the top product categories. Services, including transportation, logistics, waste management, web casting and analytical, are listed on the portal.
So far, 4,02,353 sellers and service providers are registered with the portal to sell 18,78,404 products and services.