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    Question

    In the context of CGTMSE, which of the following qualify

    as primary security? i. Assets created using the sanctioned credit facility ii. Unencumbered fixed assets (land, building, factory) linked to the borrower’s project iii. Personal guarantee of the proprietor/partners or company directors iv. Personal guarantee of the spouse of the proprietor
    A Only (i) & (ii) Correct Answer Incorrect Answer
    B Only (i) & (iii) Correct Answer Incorrect Answer
    C Only (iii) & (iv) Correct Answer Incorrect Answer
    D (i), (ii) & (iii) Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    Solution

    Under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), primary security refers to assets directly associated with the business or project financed. • Assets created out of the credit facility such as plant & machinery, business premises, or project-related land are considered primary security. • Unencumbered fixed assets of the borrowing unit (land, building, factory) directly linked to the project also qualify. • Personal guarantee of the proprietor/partners (for proprietorships/partnerships) or company directors is treated as primary security. However, the personal guarantee of a spouse or third party is considered collateral/third-party security and does notfall under primary security.

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