UPSC Prelims Practice Questions — Government Extends Validity of Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0), Increases Loan Limits under the scheme

Q1. The Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0), recently extended by the Government of India, is operated as the trustee/operating agency by which one of the following?

  • A. Small Industries Development Bank of India (SIDBI)
  • B. National Bank for Agriculture and Rural Development (NABARD)
  • C. National Credit Guarantee Trustee Company Limited (NCGTC)
  • D. Micro Units Development and Refinance Agency Limited (MUDRA)

Q2. The National Credit Guarantee Trustee Company (NCGTC), which operates the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0), is a wholly-owned company of which one of the following?

  • A. Department of Financial Services, Ministry of Finance
  • B. Department of Economic Affairs, Ministry of Finance
  • C. Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry
  • D. Ministry of Micro, Small and Medium Enterprises

Q3. In the context of credit guarantee schemes such as CGSMFI-2.0, ECLGS and CGSS, the National Credit Guarantee Trustee Company (NCGTC) is best described as which one of the following?

  • A. A common trustee company that manages and operates multiple credit guarantee trust funds set up by the Government of India
  • B. A statutory regulator of Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) under the RBI Act
  • C. A public sector refinancing institution that provides direct concessional loans to micro and small enterprises
  • D. An all-India financial institution that purchases stressed microfinance loan portfolios from banks

Q4. Under the regulatory architecture in India, which one of the following is the primary regulator that classifies and licenses Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs)?

  • A. Securities and Exchange Board of India (SEBI)
  • B. Reserve Bank of India (RBI)
  • C. National Bank for Agriculture and Rural Development (NABARD)
  • D. Small Industries Development Bank of India (SIDBI)

Q5. With reference to the Reserve Bank of India's Regulatory Framework for Microfinance Loans, 2022, consider the following statements: 1. A microfinance loan is a collateral-free loan extended to a household having annual income up to ₹3,00,000. 2. An NBFC-MFI is required to maintain qualifying assets of not less than 75 per cent of its total assets (net of intangible assets) on an ongoing basis. 3. The monthly loan repayment obligations of a household shall not exceed 50 per cent of its monthly household income. 4. A microfinance loan can be sanctioned only to a single designated adult member of the borrower household. Which of the statements given above is/are correct?

  1. A microfinance loan is a collateral-free loan extended to a household having annual income up to ₹3,00,000.
  2. An NBFC-MFI is required to maintain qualifying assets of not less than 75 per cent of its total assets (net of intangible assets) on an ongoing basis.
  3. The monthly loan repayment obligations of a household shall not exceed 50 per cent of its monthly household income.
  4. A microfinance loan can be sanctioned only to a single designated adult member of the borrower household.
  • A. 1 and 2 only
  • B. 1, 2 and 3 only
  • C. 2, 3 and 4 only
  • D. 1, 2, 3 and 4

Q6. Among the following credit guarantee schemes designed to facilitate collateral-free institutional credit in India, which one is the EARLIEST to be operationalised?

  • A. Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE)
  • B. Credit Guarantee Fund for Micro Units (CGFMU)
  • C. Emergency Credit Line Guarantee Scheme (ECLGS)
  • D. Credit Guarantee Scheme for Microfinance Institutions (CGSMFI)

Q7. The National Credit Guarantee Trustee Company (NCGTC), which operationalises the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0), is a wholly-owned company of which one of the following?

  • A. Department of Economic Affairs, Ministry of Finance
  • B. Department of Financial Services, Ministry of Finance
  • C. Department of Expenditure, Ministry of Finance
  • D. Small Industries Development Bank of India (SIDBI)

Q8. The National Credit Guarantee Trustee Company (NCGTC), which operates the Credit Guarantee Scheme for Microfinance Institutions and the Emergency Credit Line Guarantee Scheme, is a wholly-owned company of the Government of India set up under which one of the following?

  • A. Department of Economic Affairs, Ministry of Finance
  • B. Department of Financial Services, Ministry of Finance
  • C. Ministry of Micro, Small and Medium Enterprises
  • D. Reserve Bank of India

Q9. With reference to the institutional architecture of the microfinance sector in India, consider the following organisations: 1. Microfinance Institutions Network (MFIN) 2. Sa-Dhan 3. Indian Banks' Association (IBA) 4. National Bank for Agriculture and Rural Development (NABARD) Which of the above are correctly identified as Self-Regulatory Organizations (SROs) recognized by the Reserve Bank of India for the microfinance sector?

  1. Microfinance Institutions Network (MFIN)
  2. Sa-Dhan
  3. Indian Banks' Association (IBA)
  4. National Bank for Agriculture and Rural Development (NABARD)
  • A. 1 and 2 only
  • B. 1, 2 and 3
  • C. 2 and 4 only
  • D. 1, 2, 3 and 4

Q10. With reference to the SHG-Bank Linkage Programme (SHG-BLP) and the NBFC-MFI channel of microfinance in India, consider the following statements: 1. The SHG-Bank Linkage Programme was pioneered by NABARD in 1992, whereas the dedicated regulatory framework for NBFC-MFIs was first put in place by the Reserve Bank of India in 2011. 2. Under the SHG-Bank Linkage Programme credit is extended directly by banks to Self-Help Groups, whereas under the NBFC-MFI channel credit is extended by the NBFC-MFI to individual or joint-liability micro-borrowers. 3. Both MFIN and Sa-Dhan have been recognized by the Reserve Bank of India as Self-Regulatory Organizations for the SHG-Bank Linkage Programme. Which of the statements given above is/are correct?

  1. The SHG-Bank Linkage Programme was pioneered by NABARD in 1992, whereas the dedicated regulatory framework for NBFC-MFIs was first put in place by the Reserve Bank of India in 2011.
  2. Under the SHG-Bank Linkage Programme credit is extended directly by banks to Self-Help Groups, whereas under the NBFC-MFI channel credit is extended by the NBFC-MFI to individual or joint-liability micro-borrowers.
  3. Both MFIN and Sa-Dhan have been recognized by the Reserve Bank of India as Self-Regulatory Organizations for the SHG-Bank Linkage Programme.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3