UPSC Prelims Practice Questions — Cabinet approves Continuation of Stand-Up India Scheme

Q1. With reference to the credit guarantee under the Stand-Up India Scheme, consider the following statements: Which of the statements given above is/are correct?

  1. Because the guarantee covers 85% of the loan amount, the borrower must pledge collateral worth the remaining 15% of the loan.
  2. By paying the lender a set share of the loss if a borrower defaults, the guarantee lets banks lend to first-time borrowers who lack collateral and a credit history.
  3. The guarantee fee charged on covered loans adds to the resources available to meet claims, which helps keep the guarantee corpus solvent.
  • A. 1 and 2 only
  • B. 1 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q2. Suppose defaults on Stand-Up India loans rise sharply during the 2026–31 term. Which one of the following is the most likely direct consequence for the scheme's guarantee design?

  • A. The corpus is drawn down faster, because it must pay a fixed share of each covered loss
  • B. Borrowers' repayment duty ends, because the corpus settles each defaulted loan in full
  • C. Bank disbursals fall at once, because the scheme lends budget money directly to borrowers
  • D. Banks' share of each loss rises, because the cover ratio falls as claims on the corpus mount

Q3. Stand-Up India finances only greenfield enterprises. Consider the following proposals from otherwise eligible Women, SC or ST entrepreneurs: Which of the proposals given above would satisfy the greenfield condition?

  1. A first-time entrepreneur sets up a new fabrication unit using second-hand machinery bought from a closed factory.
  2. An entrepreneur takes over a bakery that is already running, renovates it and reopens it under a new brand name.
  3. An entrepreneur starts a new logistics-services firm from scratch, operating from rented premises.
  • A. 2 and 3 only
  • B. 1 only
  • C. 1, 2 and 3
  • D. 1 and 3 only

Q4. Consider the following statements in respect of the Stand-Up India Scheme: Which of the following is correct in respect of the above statements?

  1. Even though loans under the scheme carry a credit guarantee, the borrower is expected to meet part of the project cost from own or other sources.
  2. The credit guarantee under the scheme covers 85% of the loan amount, so the lending bank remains exposed to the rest of any loss on default.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q5. Consider the following pairs of a scheme and its primary basis of eligibility: Which of the pairs given above is/are correctly matched?

  1. Stand-Up India — the promoter of a new enterprise being a woman or belonging to a Scheduled Caste or Scheduled Tribe
  2. Startup India — the promoter being a first-generation entrepreneur belonging to a socially disadvantaged group
  3. Budget 2025-26 term-loan scheme — the promoter having a record of repaying an earlier government-backed enterprise loan
  • A. 2 and 3 only
  • B. 1 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q6. A new unit under Stand-Up India takes only a term loan and arranges no working-capital finance. Once production begins, which one of the following problems is it most likely to face?

  • A. Raising the margin contribution the bank asks for on the total project cost
  • B. Paying for raw materials and stock while waiting for buyers to settle their bills
  • C. Paying for the plant and machinery that must be installed before production starts
  • D. Getting the credit guarantee, which the scheme extends to composite loans alone

Q7. Consider the following statements regarding directed credit to disadvantaged entrepreneurs: Which of the statements given above is/are correct?

  1. The RBI's Priority Sector Lending norms themselves require every bank branch to lend to at least one SC/ST borrower and one woman borrower for a greenfield enterprise.
  2. The RBI's Priority Sector Lending framework treats lending to 'weaker sections' as a distinct category with its own target.
  • A. 1 only
  • B. 2 only
  • C. Both 1 and 2
  • D. Neither 1 nor 2

Q8. Consider the following assertion: 'Stand-Up India relies on the existing commercial banking network, rather than a new lending agency, to reach Women, SC and ST borrowers across the country.' Which of the statements given below support/supports the above assertion?

  1. All branches of Scheduled Commercial Banks are eligible lenders under the scheme.
  2. Each bank branch is expected to lend to borrowers from the scheme's target groups.
  3. Women account for a large share of the loans sanctioned under the scheme.
  • A. 2 and 3 only
  • B. 1, 2 and 3
  • C. 1 only
  • D. 1 and 2 only