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    Question

    The Ministry of MSME, Government of India and SIDBI set

    up a fund with a view to facilitate flow of credit to the MSE sector without the need for collaterals / third party guarantees. What is this fund called?
    A MSME fund for Credit Extension Correct Answer Incorrect Answer
    B Venture Capital fund for Micro and Small Enterprises Correct Answer Incorrect Answer
    C MSME Borrowers Trust Fund Correct Answer Incorrect Answer
    D Alternate Investment fund for Micro and Small Enterprises Correct Answer Incorrect Answer
    E Credit Guarantee Fund Trust for Micro and Small Enterprises Correct Answer Incorrect Answer

    Solution

    The Ministry of MSME, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with a view to facilitate flow of credit to the MSE sector without the need for collaterals / third party guarantees. The main objective of the scheme is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed. The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSE unit, which availed collateral - free credit facilities, failing to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 85% of the outstanding amount in default.

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