RAS question
The credit guarantee for PMMY loans is provided by which organization?
Correct answer: (C) NCGTC.
The National Credit Guarantee Trustee Company Ltd. (NCGTC) provides the credit guarantee for PMMY loans. It does so through the Credit Guarantee Fund for Micro Units (CGFMU).
Explanation
Pradhan Mantri Mudra Yojana (PMMY) provides collateral-free loans to help individuals start or expand business activities. The Department of Financial Services under the Ministry of Finance runs the scheme, and Member Lending Institutions—banks, non-banking financial companies, microfinance institutions and other financial intermediaries—provide the loans. NCGTC set up CGFMU to support this collateral-free lending. NCGTC therefore provides the guarantee linked to PMMY loans; it is not the lending bank or a sector regulator. RBI, SIDBI and NABARD do not provide this credit guarantee for PMMY loans.
Why the other options are wrong
- (A) RBI regulates the banking system, but PMMY loan guarantees are provided through NCGTC's CGFMU, not RBI.
- (B) Collateral-free PMMY loans are guaranteed through NCGTC's CGFMU; SIDBI is not part of this guarantee arrangement.
- (D) NABARD is not the PMMY guarantee provider; the guarantee is provided through NCGTC's CGFMU.
Concept
RAS current-affairs questions often link flagship credit schemes to their implementing or guarantee institutions. Welfare and MSME-credit schemes contain many policy details, but one precise institutional fact can determine the correct answer.