Question 1

A "Micro Enterprise" is defined as an entity where:

Turnover is less than ?2 Cr.Investment in Plant & Machinery = ?1 Cr AND Turnover = ?5 Cr.Investment in Plant & Machinery = ?25 Lakh.Investment in Plant & Machinery = ?10 Cr AND Turnover = ?50 Cr.

View Explanation

The new composite definition (July 2020) for Micro Enterprises requires Investment up to ?1 Crore and Turnover up to ?5 Crore.

Question 2

On the TReDS platform, the discounting of invoices is done via a process of:

Fixed Rate financing.Reverse Auction.Negotiation.Lottery.

View Explanation

Multiple financiers (Banks/NBFCs) bid to finance the invoice. The financier offering the lowest interest rate (best bid) is selected, ensuring the MSME gets the best rate through reverse auction.

Question 3

Under the CGTMSE scheme, what is the extent of guarantee cover for Micro Enterprises for loans up to ?5 Lakh?

100%85%50%75%

View Explanation

To support the smallest micro units, the guarantee cover is higher at 85% for loans up to ?5 Lakh. For amounts above ?5 Lakh up to ?50 Lakh, it is usually 75%.

Question 4

Under the MSMED Act, 2006, the penal interest payable by a buyer for delayed payment to an MSME supplier is:

Bank Rate3 times the Bank Rate compounded monthlyPrime Lending RateRepo Rate + 2%

View Explanation

This strict provision ensures timely payments to Micro and Small Enterprises. The rate is punitive (3x Bank Rate).

Question 5

An enterprise has Investment = ?8 Cr and Turnover = ?60 Cr. How is it classified?

SmallMicroMediumLarge

View Explanation

Wait! Small criteria: Inv = ?10 Cr AND Turn = ?50 Cr. Here, Turnover (?60 Cr) exceeds the limit for Small. Therefore, it moves to the next category: Medium (Inv = ?50 Cr, Turn = ?250 Cr). The categorization is based on the higher limit breached.

Question 6

While calculating "Turnover" for MSME classification, which of the following is excluded?

Domestic Sales.Government Sales.Inter-state Sales.Exports of goods or services.

View Explanation

To encourage exports without fear of losing MSME status, the government allows the exclusion of export turnover from the aggregate turnover calculation.

Question 7

The "CHAMPIONS" portal launched by the Government is dedicated to:

Resolving grievances and providing handholding support to MSMEs.Sports development.Higher education scholarships.Export of agricultural produce.

View Explanation

CHAMPIONS stands for Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength. It serves as a one-stop shop for MSME solutions.

Question 8

Under the "Hybrid Security" model allowed in the CGTMSE scheme, the bank can:

Ask the borrower to pay the guarantee fee only.Obtain collateral security for a part of the credit facility and seek guarantee cover for the remaining unsecured part.Take 100% collateral and still claim guarantee.Take collateral from a third party only.

View Explanation

In the Hybrid Security model, banks can take collateral for a portion of the loan and cover the uncovered portion under the CGTMSE guarantee scheme, allowing for higher loan limits (up to ?5 Crore).

Question 9

The financing of invoices on the TReDS platform is done on a "_____" basis.

Without RecourseCollateralizedWith RecourseShared Recourse

View Explanation

This is a key feature. Once the financier accepts the invoice and pays the MSME seller, the risk of non-payment by the corporate buyer is borne by the financier, not the MSME seller (Without Recourse).

JAIIB Quiz

Quiz Finished!