UPSC Prelims Practice Questions — Government introduces Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0)

Q1. The National Credit Guarantee Trustee Company (NCGTC) anchors much of India's credit-guarantee architecture. Of the following four schemes — CGTMSE, CGSS, CGSE and MCGS-MSME — how many are operationalised through NCGTC?

  • A. 1
  • B. 2
  • C. 3
  • D. 4

Q2. With reference to credit guarantee schemes operationalised through NCGTC, consider the following: 1. CGSS — maximum guarantee coverage raised to Rs 20 crore per eligible borrower 2. MCGS-MSME — 60% guarantee for a credit facility up to Rs 100 crore 3. CGSE — provides 50% guarantee cover to eligible exporters 4. CGSMFI-2.0 — guarantee fee of 0.50% per annum Which of the above is/are correctly identified?

  1. CGSS — maximum guarantee coverage raised to Rs 20 crore per eligible borrower
  2. MCGS-MSME — 60% guarantee for a credit facility up to Rs 100 crore
  3. CGSE — provides 50% guarantee cover to eligible exporters
  4. CGSMFI-2.0 — guarantee fee of 0.50% per annum
  • A. 1 and 3 only
  • B. 2 and 4 only
  • C. 1, 2 and 4
  • D. 1, 2, 3 and 4

Q3. Under CGSMFI-2.0, which category of NBFC-MFIs/MFIs is eligible for the highest rate of guarantee cover?

  • A. Small-sized NBFC-MFIs/MFIs (80%)
  • B. Medium-sized NBFC-MFIs/MFIs (75%)
  • C. Large-sized NBFC-MFIs/MFIs (70%)
  • D. All categories receive a uniform 75% cover

Q4. Which institution provides the graded guarantee cover (80/75/70%) to Banks/FIs under CGSMFI-2.0?

  • A. National Credit Guarantee Trustee Company (NCGTC)
  • B. Small Industries Development Bank of India (SIDBI)
  • C. National Bank for Agriculture and Rural Development (NABARD)
  • D. Reserve Bank of India (RBI)

Q5. Per the RBI's harmonised definition adopted for borrower eligibility under CGSMFI-2.0, a microfinance loan is a collateral-free loan to a household with annual household income of up to how much?

  • A. Rs 1.25 lakh
  • B. Rs 2 lakh
  • C. Rs 3 lakh
  • D. Rs 6 lakh

Q6. The eligibility of small borrowers under CGSMFI-2.0 is anchored in the harmonised microfinance definition issued by the RBI under which instrument?

  • A. Master Direction on Regulatory Framework for Microfinance Loans, 2022
  • B. Master Direction – Non-Banking Financial Company (Reserve Bank) Directions, 2016
  • C. Malegam Committee recommendations, 2011
  • D. Priority Sector Lending Guidelines, 2020

Q7. CGSMFI-2.0 prescribes interest-rate ceilings at how many distinct stages of the lending chain?

  • A. 1
  • B. 2
  • C. 3
  • D. 4

Q8. Under CGSMFI-2.0, the interest rate charged by a Member Lending Institution to an NBFC-MFI/MFI is capped at 2% per annum above which benchmark?

  • A. EBLR or MCLR
  • B. The policy repo rate
  • C. The bank's erstwhile Base Rate
  • D. The 364-day Treasury Bill rate

Q9. With reference to the evolution of the Credit Guarantee Scheme for Microfinance Institutions, consider the following: 1. The original CGSMFI was launched in 2021 as COVID-19 relief support 2. CGSMFI-2.0 covers losses of Banks/FIs on funds on-lent by NBFC-MFIs/MFIs to small borrowers 3. The original CGSMFI was introduced and notified by the Reserve Bank of India 4. CGSMFI-2.0 is a successor scheme reintroduced amid renewed microfinance-sector stress Which of the above is/are correctly identified?

  1. The original CGSMFI was launched in 2021 as COVID-19 relief support
  2. CGSMFI-2.0 covers losses of Banks/FIs on funds on-lent by NBFC-MFIs/MFIs to small borrowers
  3. The original CGSMFI was introduced and notified by the Reserve Bank of India
  4. CGSMFI-2.0 is a successor scheme reintroduced amid renewed microfinance-sector stress
  • A. 1, 2 and 3
  • B. 2, 3 and 4
  • C. 1, 2 and 4
  • D. 1 and 4 only

Q10. Under CGSMFI-2.0, the figure of Rs 20,000 crore refers to which one of the following?

  • A. The cumulative value of loans up to which guarantees may be issued, marking the scheme's validity ceiling
  • B. The budgetary outlay sanctioned by the Ministry of Finance to fund the scheme
  • C. The paid-up corpus maintained by NCGTC to honour guarantee claims
  • D. The combined Assets under Management of all participating NBFC-MFIs

Q11. With reference to CGSMFI-2.0 and its policy context, consider the following statements: 1. It is administered by the Department of Financial Services under the Ministry of Finance. 2. It shields lenders through a credit guarantee, avoiding direct fiscal outgo unless defaults crystallise. 3. Like the original CGSMFI, it was launched as a relief measure during a COVID-19 lockdown. Which of the statements given above is/are correct?

  1. It is administered by the Department of Financial Services under the Ministry of Finance.
  2. It shields lenders through a credit guarantee, avoiding direct fiscal outgo unless defaults crystallise.
  3. Like the original CGSMFI, it was launched as a relief measure during a COVID-19 lockdown.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3
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