Economics • Banking & FinanceMedium
What is the primary function of the 'Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)' in India?
A. To provide direct cash subsidies to large industrial exporters
B. To guarantee collateral-free credit facilities extended by eligible lending institutions to micro and small enterprises✓ Correct Answer
C. To regulate the interest rates charged by non-banking financial companies
D. To manage foreign exchange reserves held by scheduled commercial banks
💡 Solution & Explanation
The Credit Guarantee Fund Trust for Micro and Small Enterprises was established jointly by the Ministry of Micro, Small and Medium Enterprises and the Small Industries Development Bank of India to provide credit guarantees for collateral-free loans. This initiative reduces lending risks for financial institutions, enabling small businesses to access formal credit without traditional security requirements. This scheme specifically strengthens the priority sector lending ecosystem.
More Economics Banking & Finance questions
- What is the primary objective of the 'RBI Retail Direct' scheme?
- Which of the following payment systems in India operates as a decentralized, automated clearing house…
- The 'Lead Bank Scheme' in India, designed to adopt a service area approach for rural credit delivery, was…
- What does the term 'Prompt Corrective Action (PCA)' framework, administered by the Reserve Bank of India,…
- Which of the following organizations operates the 'Structured Financial Messaging System (SFMS)' used…