MSME Policy Circular 2024-25 Overview

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Questions and Answers

What is the purpose of the LOAN & ADVANCES CIRCULAR NO. 26/24?

To announce the implementation of a new loan processing fee for MSE borrowers
To provide information on the new MSME Policy for the 2024-25 financial year (correct)
To update regulations on the registration of enterprises under the MSMED Act, 2006
To explain the new guidelines for financial literacy and consultancy to the Micro and Small Enterprises Sector

Which of the following is NOT a criterion used to classify Micro, Small and Medium Enterprises in the MSMED Act, 2006?

Type of industry (correct)
Annual turnover
Investment in plant and machinery or equipment
Number of employees

What is the name of the document referenced in the appendix?

MSMED Act, 2006
L&A Circular No. 29/23
Credit Circular No. 26/24
MSME Policy (correct)

Where is the Head Office of Dakshin Bihar Gramin Bank located?

Asochak, Patna-800030 (C) Signup and view all the answers

What is the date this circular was issued?

01.08.2024 (D) Signup and view all the answers

According to the index, which section outlines the policy overview?

Section 1 (B) Signup and view all the answers

What is the purpose of the Empowered Committee on MSMEs?

To review and approve loan applications from MSE borrowers (B) Signup and view all the answers

Which of the following is NOT mentioned as a common guideline for lending to the MSME sector?

Minimum interest rate (C) Signup and view all the answers

What is the primary reason why the Government actively promotes business enterprises?

To create more jobs and stimulate economic growth. (C) Signup and view all the answers

Why do MSMEs deserve special attention from the government?

They are major contributors to the Indian economy despite their small size. (A) Signup and view all the answers

What is the main reason why MSMEs are considered the 'powerful engine of economic growth'?

They are the second largest employment generator in India. (A) Signup and view all the answers

Which unique characteristic makes MSMEs stand out in the business landscape?

Their agility and dynamism in adapting to competitive markets. (C) Signup and view all the answers

What role do MSMEs play in the industrialization of rural and backward areas?

They create job opportunities and contribute to economic development. (B) Signup and view all the answers

How do MSMEs contribute to the socio-economic development of a country?

They provide ancillary services to large industries and generate employment. (A) Signup and view all the answers

What is the primary reason why MSMEs are important to the bank?

They offer opportunities for cross-selling banking products and services. (A) Signup and view all the answers

What is the main goal of the MSMED act 2006?

To empower MSME entrepreneurs and enable them to compete effectively and contribute to economic growth. (A) Signup and view all the answers

What was the primary purpose of establishing the Small Industries Development Bank of India (SIDBI)?

To promote and finance the MSME sector (A) Signup and view all the answers

Which program was initiated to create employment opportunities through self-employment ventures?

Prime Minister's Employment Generation Programme (PMEGP) (B) Signup and view all the answers

What significant change did the MSMED Act of 2006 introduce regarding enterprises?

Inclusion of the services sector in the definition of MSMEs (A) Signup and view all the answers

What role do MSMEs play in the broader economic context according to the content?

They are crucial for inclusive growth and holistic development. (A) Signup and view all the answers

When was the Micro, Small and Medium Enterprises Development (MSMED) Act enacted?

2006 (A) Signup and view all the answers

What is the primary responsibility of the borrowers when applying for a loan?

To ensure the genuineness of the suppliers of machinery (D) Signup and view all the answers

What is one of the advantages MSMEs have compared to larger enterprises?

Easier access to raw materials and subsidies (B) Signup and view all the answers

What is one aim of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)?

To offer credit facilities to eligible borrowers (A) Signup and view all the answers

Which of the following is NOT a step that branches should take before releasing disbursement?

Release funds immediately upon application (B) Signup and view all the answers

What should branches critically analyze in the CIR Reports of MSME entrepreneurs?

Each item in the report for full satisfaction (D) Signup and view all the answers

Why are MSMEs recognized for their potential within the manufacturing and service sectors?

They leverage available resources to enhance capabilities. (D) Signup and view all the answers

At disbursement of the loan, what should borrowers be guided about?

Repayment modes and account maintenance (C) Signup and view all the answers

Why is it important for branches to make discreet inquiries about suppliers?

To verify the supplier's legitimacy before fund disbursement (B) Signup and view all the answers

Which condition is emphasized to be documented clearly in the sanction letter?

Mode of repayment and account maintenance (C) Signup and view all the answers

What should branches ensure regarding the disbursement of funds?

Releases should be made to verified supplier accounts only (D) Signup and view all the answers

What aspect of their applications should MSME entrepreneurs pay special attention to?

Compliance with banking practices (C) Signup and view all the answers

What percentage of manufacturing output is contributed by the MSME sector in India?

45% (B) Signup and view all the answers

How many million people are employed by the MSME sector in India?

111 million (C) Signup and view all the answers

What challenge does the MSME sector in India face?

Inadequate market linkages (A) Signup and view all the answers

What is the contribution of the MSME sector to India's GDP?

28% (C) Signup and view all the answers

Which sector does the MSME sector rank next to in terms of employment volume?

Agricultural (D) Signup and view all the answers

How does the MSME sector benefit rural and backward areas?

By facilitating industrialization (B) Signup and view all the answers

What role do MSMEs play in relation to large industries?

Ancillary units (D) Signup and view all the answers

What major government initiative supports the MSME sector in India?

Policies for micro, small, and medium enterprises (D) Signup and view all the answers

What are the industries that should follow a cash budget system? (Select all that apply)

Information Technology (A), Cold Storage (B), Brick Field (C), Tea (D) Signup and view all the answers

What is NOT a typical reason for a term loan?

Purchasing a new company car for the owner (A) Signup and view all the answers

What is the maximum duration of a term loan, including the moratorium period?

10 years (B) Signup and view all the answers

What is the typical range for the moratorium period of a term loan?

6 to 12 months (D) Signup and view all the answers

In what circumstances might a Regional Officer extend the repayment period?

If the project execution experiences delays (C) Signup and view all the answers

How should term loan disbursement be made?

Directly to the supplier (A) Signup and view all the answers

What is the principle behind setting a repayment schedule?

Based on the unit's sustenance requirements and surplus generating capacity (D) Signup and view all the answers

Which of these is NOT a benchmark financial ratio mentioned in the context of term loan assessment?

ROCE (Return on Capital Employed) (A) Signup and view all the answers

Flashcards

MSME

Micro, Small and Medium Enterprises, key economic sector in India.

Economic Growth

Increase in the production of goods and services in a country.