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MSME Delayed-Payment Interest Calculator

Use your own assumptions to estimate compound interest on an overdue invoice from entered statutory assumptions before deciding the next operational step.

If the buyer made a timely written objection, use the date that objection was removed as the day of acceptance.
Enter the RBI Bank Rate applicable to the overdue period. The 5.5% default was checked on 13 September 2026.
Without an agreed date, the appointed day is the day immediately after the statutory 15-day period.
The date payment was (or will be) actually made. Use today's date to see interest accrued so far. This single-rate estimate only accepts a bank rate effective on or before the interest start date.

Confirm supplier eligibility, payment terms, and consistent dates before viewing an estimate.

Method and legal basis

Section 16 of the MSMED Act, 2006 provides that where a buyer fails to pay a micro or small enterprise supplier by the agreed date or the statutory appointed day, the buyer is liable to pay compound interest, with monthly rests, at three times the bank rate notified by the RBI , from the appointed day, or the day immediately following the agreed payment date, until actual payment.

This calculator: (1) derives the interest start date as the day after the 15-day statutory period when no payment date was agreed, or the day after an agreed payment date capped at 45 days from acceptance; (2) validates that the selected bank rate was effective by that date; (3) computes the number of days to the payment/as-on date; (4) applies the interest rate as 3 × the bank rate you enter; (5) compounds that rate on a monthly basis — splitting the overdue period into whole months plus a remainder of days — over the principal amount; (6) adds the resulting interest to the principal to show the total payable.

  • Interest rate used = 3 × RBI notified bank rate (editable above).
  • Compounding is monthly (monthly rests), not daily or annual.
  • The remainder period (less than a full month) is charged pro-rata on a daily basis at the same annual rate.

Sources

  • Micro, Small and Medium Enterprises Development Act, 2006 — Section 16 (date from which and rate at which interest is payable) and Section 15 / §2(b) (appointed day).
  • Reserve Bank of India — notified bank rate, updated periodically.

Confirm the RBI bank rate in force on the relevant date(s) and the exact appointed-day computation for your facts with a qualified advocate or chartered accountant before relying on this estimate, especially for MSME Facilitation Council references or arbitration under §18 of the Act.

Frequently asked questions

Under Section 16 of the MSMED Act 2006, a buyer who delays payment to a registered micro or small enterprise beyond the appointed day owes compound interest, with monthly rests, at three times the bank rate notified by the Reserve Bank of India.

If no payment date is agreed, the appointed day is the day immediately following the end of 15 days from acceptance or deemed acceptance. If a payment date is agreed, the agreement cannot exceed 45 days from acceptance, and interest starts on the following day.

Section 16 expressly provides for "compound interest with monthly rests" — the interest is added to the outstanding principal at the end of each month, and the next month's interest is charged on the enlarged balance, rather than only on the original invoice amount.

Reviewed 2026-09-14. MSMED Act, 2006Reserve Bank of India