Government lowers late payment surcharge for discoms

The central government has lowered the late payment surcharge levied by power and transmission developers on discoms by linking it to the State Bank of India’s (SBI) lending rate.

According to the new rules, for the first month of default, late payment surcharge will be payable on the outstanding after the due date at the base rate of late payment surcharge applicable for the period. Base rate of late payment surcharge means the marginal cost of funds based lending rate for one year of the SBI, as applicable on the April 1 of the financial year in which the period lies. The rate of late payment surcharge for the successive months of default by discoms will increase by 0.5 percent for every month of delay provided that the late payment surcharge will not be more than 3 percent higher than the base rate at any time. In addition, if the period of default lies in two or more financial years, the base rate of late payment surcharge shall be calculated separately.

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