MCQ
Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) MCQ - Practice Questions with Answers
Solve 5 Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) questions for RAS/RPSC preparation.
Practice questions
Q1Which statement best describes the nature and administrative control of the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME)?
MCGS-MSME is a self-financing guarantee mechanism under the Department of Financial Services, Ministry of Finance, and NCGTC implements it through the Mutual Credit Guarantee Fund-MSME. The guarantee protects the lender against a defined share of default; it is not a cash subsidy, interest subvention or loan waiver for the MSME.
Q2Consider the following statements about MCGS-MSME: 1. After an account becomes an NPA and recovery begins, NCGTC pays 75% of the eligible claim within 30 days of the interim claim. 2. The remaining 25% is paid when recovery proceedings conclude or the decree becomes time-barred, whichever is earlier. 3. Under the 2026 exporter provision, eligible profitable MSME exporters may receive loans up to ₹20 crore with 75% cover of the amount in default. How many of the statements given above are correct?
All three statements are correct. The ordinary claim is released in two stages: 75% of the eligible claim within 30 days after the interim claim conditions are met, and the final 25% after recovery concludes or the decree becomes time-barred. Separately, the 2026 exporter provision allows up to ₹20 crore with 75% cover of the amount in default for eligible profitable exporters.
Q3For a general MSME loan under MCGS-MSME, what is the annual guarantee-fee schedule?
For general MSMEs, the annual guarantee fee is nil in the sanction year. It is then 1.5% per annum for the next three years on the loan outstanding as on 31 March of the previous year, and 1% per annum thereafter. The 0.50% post-first-year rate is a distinct concession for eligible exporter MSMEs.
Q4Which one of the following is NOT a correct eligibility or lending condition under MCGS-MSME?
Option D is incorrect. Assets created from the bank finance serve as primary security, and lenders are not to insist on separate collateral; this is what enables collateral-free term lending. A valid Udyam Registration Number, non-NPA status at sanction or disbursement, and conditional coverage of both new and existing units are all valid provisions.
Q5Consider the following statements about general MSME loans under MCGS-MSME: 1. A credit facility up to ₹100 crore may receive guarantee support even if the total project cost is higher. 2. NCGTC guarantees 60% of the amount in default, while the lending institution retains the remaining 40% risk. Which of the statements given above is/are correct?
Both statements are correct. The eligible credit facility is capped at ₹100 crore, but the project itself may cost more. The guarantee is not 60% of the original loan in every case; it is 60% of the amount in default. Consequently, the Member Lending Institution continues to bear the remaining 40% default risk.
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