Union Budget 2023: FinMin notifies refund of security deposits to MSMEs

In her budget speech, FM had proposed refund of 95% of amount forfeited on account of non-performance of contract due to Covid

The Finance Ministry on Monday notified the FY24 Budget announcement, asking departments and public sector units to refund securities deposited by micro, small and medium enterprises (MSMEs) during the Covid-19 pandemic.

“In cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings. This will provide relief to MSMEs,” finance minister Nirmala Sitharaman said in her Budget speech last week.

The relief will be provided in all contracts for procurements of goods and services, entered into by any ministry, department, attached or subordinate office, autonomous body and central public sector enterprise (CPSE), public sector financial institution with MSMEs. However, no interest shall be paid on such refunds, notified as a follow-up to the “Vivad se Vishwas-I” scheme. Under the eligibility criteria of the scheme, the original delivery or completion period should be between 19 February, 2020 and 31 March, 2022. The grant of relief will be monitored through Government e-Marketplace (GeM).

“In case any firm has been debarred only due to default in execution of such contracts, such debarment shall also be revoked, by issuing an appropriate order by the procuring entity. However, in case a firm has been ignored for placement of any contract due to debarment in the interim period (i.e. date of debarment and the date of revocation under this order), no claim shall be entertained,” the finance ministry said in its notification.