UPSC Prelims Practice Questions — Government modifies Mutual Credit Guarantee Scheme to Support MSME Manufacturers and Exporters in line with Budget 2025-26

Q1. Which one of the following best describes the corporate/legal status of the National Credit Guarantee Trustee Company (NCGTC)?

  • A. A statutory body established under a dedicated Act of Parliament
  • B. A wholly owned company of the Government of India under the Department of Financial Services
  • C. A subsidiary of the Reserve Bank of India
  • D. A trust jointly settled by the Ministry of MSME and SIDBI

Q2. Under the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), the maximum loan size per borrower eligible for guarantee cover is:

  • A. Rs.20 crore
  • B. Rs.50 crore
  • C. Rs.100 crore
  • D. Rs.10 crore

Q3. Consider the following statements regarding the features of MCGS-MSME. Which one of the following is NOT correctly stated?

  1. 1. The borrower must hold a valid Udyam Registration Number.
  2. 2. The credit facility is for the purchase of plant & machinery/equipment.
  3. 3. The general guarantee cover is 60% of the credit facility.
  4. 4. Loans up to Rs.50 crore carry a moratorium of up to 5 years on principal repayment.
  • A. 1 only
  • B. 2 and 3
  • C. 4 only
  • D. 1 and 4

Q4. With reference to the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), consider the following statements. Which of the above is/are correctly identified?

  1. 1. It was jointly set up by the Ministry of MSME and SIDBI in the year 2000.
  2. 2. With effect from 1 April 2025 its guarantee cover ceiling was raised to Rs.10 crore.
  3. 3. It is designed for Micro and Small Enterprises (MSEs).
  4. 4. It is administered by NCGTC under the Ministry of Finance.
  • A. 1, 2 and 3
  • B. 2 and 4
  • C. 1 and 4
  • D. 1, 2, 3 and 4

Q5. Which one of the following credit guarantee schemes is designed to support the largest ticket-size term loans for MSME plant & machinery capital expenditure?

  • A. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
  • B. Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME)
  • C. Credit Guarantee Scheme for Startups (CGSS)
  • D. Credit Guarantee Fund for Micro Units (CGFMU)

Q6. The modifications made to MCGS-MSME (expanding it to services and adding exporter incentives) were notified to operationalise commitments made under which one of the following?

  • A. Union Budget 2024-25
  • B. Union Budget 2025-26
  • C. Atmanirbhar Bharat Package 3.0
  • D. National Manufacturing Mission of 2020

Q7. To qualify for the special exporter window of MCGS-MSME (loans up to Rs.20 crore with 75% guarantee cover), an MSME must have exports of at least 25% of turnover in each of the preceding how many financial years?

  • A. Two
  • B. Three
  • C. Four
  • D. Five

Q8. Which of the following are correctly identified as MSME credit/classification measures announced in the Union Budget 2025-26? Which of the above is/are correctly identified?

  1. 1. Enhancement of MSME investment limits to 2.5 times the earlier levels.
  2. 2. Raising of the credit guarantee cover for micro and small enterprises from Rs.5 crore to Rs.10 crore.
  3. 3. Doubling of guarantee cover for well-run startups from Rs.10 crore to Rs.20 crore.
  4. 4. Enhancement of MSME turnover limits to 5 times the earlier levels.
  • A. 1, 2 and 3
  • B. 1 and 4
  • C. 2, 3 and 4
  • D. 1, 2, 3 and 4

Q9. Under the Udyam Registration framework used to determine eligibility for MSME schemes, enterprises are classified into how many categories?

  • A. Two
  • B. Three
  • C. Four
  • D. Five