UPSC Prelims Practice Questions — RBI raises loan limits for small businesses, backs REIT loans
Q1. What is the revised ceiling (in rupees) on collateral-free loans extended to Micro and Small Enterprises (MSEs) under the Reserve Bank of India's February 2026 amended Master Directions on Lending to MSME Sector?
- A. ₹10 lakh
- B. ₹15 lakh
- C. ₹20 lakh
- D. ₹25 lakh
Q2. The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) — the guarantee mechanism that backstops the collateral-free MSE loans whose ceiling RBI raised in February 2026 — was jointly set up by which one of the following pairs?
- A. Ministry of Finance and NABARD
- B. Ministry of Micro, Small and Medium Enterprises and SIDBI
- C. Ministry of Commerce and Industry and EXIM Bank
- D. Ministry of Corporate Affairs and National Housing Bank
Q3. The statutory definition of 'Micro and Small Enterprises', to which the Reserve Bank of India's February 2026 revised collateral-free loan ceiling of ₹20 lakh applies, is contained in which one of the following enactments?
- A. Companies Act, 2013
- B. Micro, Small and Medium Enterprises Development Act, 2006
- C. Industries (Development and Regulation) Act, 1951
- D. Factories Act, 1948
Q4. With reference to the Reserve Bank of India's February 2026 framework permitting bank lending to Real Estate Investment Trusts (REITs), consider the following statements comparing it with the pre-existing framework for Infrastructure Investment Trusts (InvITs):
1. Prior to February 2026, scheduled commercial banks were permitted to lend to InvITs but not to REITs.
2. Under the new framework, banks may finance land acquisition by a REIT provided such acquisition forms part of an identifiable project.
3. The aggregate credit exposure of all banks to a borrowing REIT and its underlying SPVs/holding companies is capped at 49% of the value of the REIT's assets.
Which of the statements given above is/are correct?
- Prior to February 2026, scheduled commercial banks were permitted to lend to InvITs but not to REITs.
- Under the new framework, banks may finance land acquisition by a REIT provided such acquisition forms part of an identifiable project.
- The aggregate credit exposure of all banks to a borrowing REIT and its underlying SPVs/holding companies is capped at 49% of the value of the REIT's assets.
- A. 1 and 2 only
- B. 1 and 3 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q5. With reference to the prudential safeguards prescribed by the Reserve Bank of India in February 2026 for bank lending to Real Estate Investment Trusts (REITs), consider the following:
1. The loan must be structured as an amortising loan, with no bullet or balloon principal repayments.
2. The bank finance must be fully secured by way of mortgage of identified assets.
3. The end use of funds must not finance land acquisition by the REIT.
4. The aggregate credit exposure of all banks to a borrowing REIT shall not exceed 25% of the REIT's net worth.
Which of the above is/are NOT correct?
- The loan must be structured as an amortising loan, with no bullet or balloon principal repayments.
- The bank finance must be fully secured by way of mortgage of identified assets.
- The end use of funds must not finance land acquisition by the REIT.
- The aggregate credit exposure of all banks to a borrowing REIT shall not exceed 25% of the REIT's net worth.
- A. 1 and 3
- B. 2 and 4
- C. 1, 2 and 4
- D. 4 only