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      Question

      Which of the following is one of important objective behind the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMS

      • E ?
      A To guarantee loans provided to MSMEs by financial institutions to ensure that MSMEs can meet their working capital needs. Correct Answer Incorrect Answer
      B To provide direct financial assistance to MSMEs for capital expenditure and innovation in product development. Correct Answer Incorrect Answer
      C To guarantee loans for MSMEs involved in manufacturing, specifically for upgrading their technology and infrastructure. Correct Answer Incorrect Answer
      D To encourage MSMEs to create more employment opportunities by offering subsidies on wage payments for their employees. Correct Answer Incorrect Answer
      E To ensure that MSMEs are exempt from paying taxes for the first five years of operation. Correct Answer Incorrect Answer

      Solution

      The Credit Guarantee Fund Scheme (CGTMSE) was established to provide guarantees to financial institutions that extend credit to MSMEs. This enables MSMEs to access loans without needing to provide collateral, which is often a barrier for small businesses. The primary goal of the CGTMSE is to enhance credit flow to the MSME sector by minimizing the risks faced by lenders, which in turn boosts working capital availability for MSMEs.

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