MCQ
Credit Guarantee MCQ - Practice Questions with Answers
Solve 85 Credit Guarantee questions for RAS/RPSC preparation.
Practice questions
Q1Which statement correctly describes the credit guarantee coverage under ECLGS 5.0 as notified on 6 May 2026?
The notified coverage is 100% for MSMEs and 90% for non-MSMEs and the airline sector for the amount in default. The other options misstate either the percentage or the eligible borrower category.
Q2Consider the following statements about guarantee fee and tenure under CGFMU: 1. From 1 April 2023, the base-year guarantee fee is the standard basic rate of 1% per annum of the sanctioned amount on micro loans. 2. For SHGs, the guarantee fee is 0.25% per annum during the first year and 0.5% per annum in subsequent years. 3. Every new portfolio comprises the base year plus five currency years. Which of the statements given above are correct?
Statements 1 and 2 are correct as per the CGFMU FAQ. Statement 3 is incorrect because every new portfolio comprises the base year plus 3 currency years, not five.
Q3Consider the following statements: 1. ECLGS was introduced to enable additional funding of up to Rs. three lakh crore to eligible MSMEs and interested MUDRA borrowers. 2. Under ECLGS, 100 per cent guarantee coverage was to be provided by NCGTC for the additional funding. 3. ECLGS was formulated mainly as a monsoon crop-loan relief scheme for agricultural borrowers. Which of the statements given above are correct?
Statements 1 and 2 are correct. Statement 3 is false because the scheme was a COVID-19 response for MSME-sector economic distress, not a monsoon crop-loan relief scheme.
Q4Which scheme did the Union Cabinet approve on May 6, 2026 to provide targeted credit support to Indian airlines?
The Cabinet approved Emergency Credit Line Guarantee Scheme 5.0 for targeted credit support to airlines. The other options are aviation-related but were not the Cabinet decision reported in the May 6 release.
Q5Consider the following statements: 1. Under the original ECLGS eligibility, MSME borrower accounts with outstanding credit up to Rs. 25 crore as on 29 February 2020 were covered, subject to other conditions. 2. The annual turnover ceiling mentioned in the original ECLGS eligibility was up to Rs. 100 crore. 3. GECL funding to eligible MSME borrowers was up to 50 per cent of their entire outstanding credit as on 29 February 2020. Which of the statements given above are correct?
Statements 1 and 2 are correct. Statement 3 is false because the GECL amount was up to 20 per cent of outstanding credit, not 50 per cent.
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6Consider the following statements about agriculture-related eligibility under CGFMU: 1. Loans for purely agricultural activities are not eligible under CGFMU. 2. Micro loans for allied agriculture activities such as pisciculture, beekeeping and poultry may be covered. 3. Crop loans and land-improvement loans such as canals, irrigation and wells are explicitly included as eligible allied-agriculture loans. Which of the statements given above are correct?
7Consider the following statements about the Credit Guarantee Fund Scheme for Education Loans: 1. CGFSEL is a Trust Fund set up by the Government of India and managed by NCGTC as trustee. 2. It guarantees payment against default in eligible education loans up to Rs. 7.5 lakh. 3. The education loan under the scheme refers to financial assistance for higher education as per the IBA Model Educational Loan Scheme. 4. The Trust covers assistance only when collateral security and third-party guarantee are taken by the MLI. Which of the statements given above are correct?
8Consider the following statements about ECLGS 5.0 funding envelope and agency roles: 1. The total targeted additional credit flow under ECLGS 5.0 was Rs. 2,55,000 crore. 2. The Rs. 5,000 crore earmark for Indian airlines was part of the additional credit-flow envelope. 3. RBI was named as the guarantee-cover provider under eligible additional credit facilities. 4. NCGTC was named as the entity covering the amount in default. Which of the statements given above are correct?
9Consider the following statements about CGTMSE: 1. CGTMSE was jointly set up by the Ministry of MSME, Government of India, and SIDBI. 2. CGTMSE facilitates institutional credit flow to Micro and Small Enterprises. 3. CGTMSE directly grants loans and subsidies to borrowers through its own agents. Which of the statements given above are correct?
10Consider the following statements about the rationale and institutional design of the original ECLGS: 1. It was a response to the unprecedented situation caused by COVID-19 and the consequent lockdown. 2. It gave incentives to MLIs to increase access to low-cost credit for MSME borrowers. 3. Its original purpose was to support airlines specifically in the wake of the West Asia Crisis. 4. NCGTC was to provide guarantee cover to banks, financial institutions and NBFCs. Which of the statements given above are correct?
11Consider the following statements about eligible institutions under CGSS: 1. Scheduled Commercial Banks and Financial Institutions can be eligible Member Institutions. 2. RBI-registered NBFCs need minimum net worth of Rs. 100 crore and a BBB-or-above rating to be eligible. 3. SEBI-registered mutual funds, rather than Alternative Investment Funds, are listed as eligible institutions. Which of the statements given above are correct?
121. NCGTC was incorporated under the Companies Act, 1956 on March 28, 2014. 2. NCGTC was established by the Department of Financial Services, Ministry of Finance, as a wholly owned Government of India company. 3. Credit-guarantee programmes are designed to share lenders' lending risk and facilitate access to finance for prospective borrowers. Which of the statements given above are correct?
13Consider the following statements about ECLGS 3.0: 1. ECLGS 3.0 covered business enterprises in Hospitality, Travel & Tourism, Leisure and Sporting sectors. 2. It applied to borrowers with total credit outstanding not exceeding Rs. 50 crore as on 29 February 2020. 3. It allowed extension of credit up to 40% of total credit outstanding across lending institutions as on 29 February 2020. 4. The tenor of loans under ECLGS 3.0 was six years, including a moratorium period of two years. Which of the statements given above are correct?
14Consider the following statements: 1. In CGSS, transaction-based guarantee cover is obtained by Member Institutions on a single eligible borrower basis. 2. In CGSS, umbrella-based guarantee cover is meant only for Scheduled Commercial Banks, not Venture Debt Funds. 3. NCGTC operates CGSS. Which of the statements given above are correct?
15Consider the following statements: 1. CGFSEL was notified on 16.09.2015. 2. Under CGFSEL, the Central Government gives guarantee for education loans taken without collateral security and third-party guarantee for a maximum loan limit of Rs. 7.5 lakh. 3. CGFSEL provides guarantee cover to the extent of 75% of the amount in default through NCGTC. 4. CGFSEL is limited to education loans up to Rs. 15 lakh with 100% guarantee cover. Which of the statements given above are correct?