Question 1

An enterprise with an Investment in Plant and Machinery of ?8 Crore and Annual Turnover of ?45 Crore will be classified as:

Small EnterpriseMedium EnterpriseLarge EnterpriseMicro Enterprise

View Explanation

Classification criteria for Small Enterprise: Investment = ?10 Cr AND Turnover = ?50 Cr. Since both conditions are met (8 < 10 and 45 < 50), it is a Small Enterprise.

Question 2

Under the MSMED Act, 2006, if a buyer fails to make payment to a micro or small enterprise supplier within 45 days, they are liable to pay compound interest at:

Bank RateSBI Base Rate + 2%Three times the Bank Rate notified by RBIRepo Rate

View Explanation

This penal provision is designed to ensure timely payments to MSMEs. The interest is compounded with monthly rests at 3 times the Bank Rate.

Question 3

Is "Udyam Registration" mandatory for MSMEs to avail benefits under Priority Sector Lending?

Only for Medium Enterprises.No, it is optional.Only for Manufacturing Enterprises.Yes, it is mandatory.

View Explanation

For classification as MSME and to avail benefits under the PSL norms (and other government schemes), obtaining Udyam Registration is mandatory. Without it, the unit cannot be classified as MSME by the bank.

Question 4

What is the maximum credit facility amount covered under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme (Revised 2023)?

?200 Lakh?1000 Lakh?500 Lakh?100 Lakh

View Explanation

The coverage limit under CGTMSE was enhanced from ?2 Crore to ?5 Crore (?500 Lakh) to encourage lending to the MSE sector without collateral.

Question 5

The "Udyam Registration Certificate" (URC) is valid for:

Lifetime (unless cancelled)5 Years3 Years1 Year

View Explanation

Udyam Registration is a one-time registration process. The certificate issued is valid for a lifetime, provided the enterprise updates its details annually.

Question 6

RBI has mandated banks not to accept collateral security for loans to MSE units up to:

?20 Lakh?5 Lakh?10 Lakh?50 Lakh

View Explanation

Banks are mandated not to accept collateral security in the case of loans up to ?10 lakh extended to units in the MSE sector. For loans above ?10 lakh up to ?2 crore, banks can use the CGTMSE guarantee cover instead of collateral.

Question 7

On the TReDS platform, once an invoice is financed by a financier, the obligation to pay on the due date lies with:

The Corporate Buyer.The TReDS Platform Operator.The Reserve Bank of India.The MSME Seller.

View Explanation

Financing on TReDS is "without recourse" to the seller. Once financed, the debt is assigned to the financier, and the Corporate Buyer is legally obligated to pay the financier on the due date.

Question 8

The "Cluster Approach" in MSME financing aims to:

Group all NPA accounts into a cluster.Lend only to rural clusters.Lend only to one large industry in a city.Provide comprehensive financial services to a clearly defined group of industries concentrated in a specific location.

View Explanation

Cluster-based financing allows banks to assess risks better, reduce transaction costs, and provide tailored services to similar units located in a geographical cluster (e.g., Tirupur textile cluster).

Question 9

Any dispute regarding delayed payment to MSMEs can be referred to:

Debt Recovery Tribunal (DRT).Micro and Small Enterprises Facilitation Council (MSEFC).Civil Court.NCLT.

View Explanation

The MSMED Act establishes the MSEFC to arbitrate and settle disputes related to delayed payments. MSEFC awards are binding and have the effect of a court decree.

Question 10

For the purpose of MSME classification, which component is EXCLUDED from the calculation of "Turnover"?

Sales to government.Domestic sales.Export of goods or services or both.Inter-state sales.

View Explanation

To encourage exports, the government has mandated that "Exports of goods or services or both" shall be excluded while calculating the turnover for MSME classification purposes.

JAIIB Quiz

Quiz Finished!