UPSC Prelims Practice Questions — Govt. modifies Mutual Credit Guarantee Scheme for MSMEs
Q1. Under the modified Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), which one of the following is the designated guarantee-providing agency?
- A. Small Industries Development Bank of India (SIDBI)
- B. National Credit Guarantee Trustee Company Limited (NCGTC)
- C. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
- D. National Bank for Agriculture and Rural Development (NABARD)
Q2. With reference to the modified Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), consider the following features:
1. It provides 60% guarantee coverage on credit facility up to ₹100 crore extended for purchase of equipment/machinery.
2. Service sector MSMEs are eligible beneficiaries under the modified scheme.
3. The borrower's upfront contribution has been raised to 10% of the loan amount.
4. The guaranteed tenure of the credit facility under the scheme extends up to 10 years.
Which of the above is/are correctly identified?
- It provides 60% guarantee coverage on credit facility up to ₹100 crore extended for purchase of equipment/machinery.
- Service sector MSMEs are eligible beneficiaries under the modified scheme.
- The borrower's upfront contribution has been raised to 10% of the loan amount.
- The guaranteed tenure of the credit facility under the scheme extends up to 10 years.
- A. 1 and 2 only
- B. 1, 2 and 4
- C. 2, 3 and 4
- D. 1, 3 and 4
Q3. With reference to the modified MCGS-MSME, consider the following statements:
1. The credit guarantee under the scheme is extended by the National Credit Guarantee Trustee Company Limited (NCGTC).
2. Member Lending Institutions (MLIs), comprising eligible banks and financial institutions, extend the covered loans.
3. The maximum credit facility per MSME under the scheme is ₹5 crore.
4. The cost of equipment/machinery is required to be up to 60% of the project cost.
Which of the above is/are NOT correct?
- The credit guarantee under the scheme is extended by the National Credit Guarantee Trustee Company Limited (NCGTC).
- Member Lending Institutions (MLIs), comprising eligible banks and financial institutions, extend the covered loans.
- The maximum credit facility per MSME under the scheme is ₹5 crore.
- The cost of equipment/machinery is required to be up to 60% of the project cost.
- A. 3 only
- B. 1 and 3
- C. 3 and 4
- D. 2 and 4
Q4. Consider the following statements comparing the modified MCGS-MSME (2026) with its original 2025 version:
1. The cap on the cost of equipment/machinery has been reduced from 75% to 60% of the project cost.
2. The 5% upfront contribution, earlier non-refundable, has now been made refundable @ 1% per year from the 4th year onwards, subject to satisfactory loan performance.
3. The maximum credit facility per MSME has been raised from ₹100 crore to ₹250 crore.
Which of the statements given above is/are correct?
- The cap on the cost of equipment/machinery has been reduced from 75% to 60% of the project cost.
- The 5% upfront contribution, earlier non-refundable, has now been made refundable @ 1% per year from the 4th year onwards, subject to satisfactory loan performance.
- The maximum credit facility per MSME has been raised from ₹100 crore to ₹250 crore.
- A. 1 only
- B. 1 and 2 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q5. Under the modified MCGS-MSME, the guaranteed tenure of the credit facility extends up to how many years?
- A. 5 years
- B. 7 years
- C. 10 years
- D. 15 years