The Morning Brief MSMEs and the 7.3 Trillion Rupee Payment Problem
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Dec 19, 2025 Basant Kaur, Country Head of C2FO India and expert in early payment solutions, joins Ramesh Dharmaji, Senior Advisor at the Global Alliance for Mass Entrepreneurship, to tackle India's staggering 7.3 lakh crore rupee payment backlog for MSMEs. They discuss the flaws in the 45-day payment rule and why regulations are failing. Insightfully, they explore the role of banking in MSME credit expansion and advocate for incentivizing buyer behavior rather than penalties. The conversation wraps up with potential fixes to streamline dispute resolutions and improve TReDS participation.
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Scale Of The Payment Problem
- Delayed payments to MSMEs are estimated at ₹7.3 lakh crore, about 5% of India's GVA.
- The problem fell ~30% since 2022 but still threatens jobs, liquidity, and growth.
Policy Exists, Execution Lags
- The 45-day payment rule exists but enforcement and execution lag behind.
- Buyers use legacy approvals and face limited consequences, so delays persist.
Credit Has Expanded Rapidly
- Banks have sharply expanded MSME lending, reaching roughly ₹43.3 lakh crore exposure.
- New-to-credit MSMEs grew significantly, showing rising formal credit access.