MSME Very important MCQs
1. Which sector TUF applies to? a)Textile* b)Shoe manufacture, c)Food processing,
d)Glass manufacture
2. Which one of the following institution has initiated Project uptech scheme?
a)SIDBI, b)SBI*, c) IDBI, d)TIFAC
3. Market failure refers to : a) Imperfect markets, b)Perfect markets*, c)Traditional
markets
d)Both (a) and (b) above
4. Which one of the following factors is not included in the Market Gap?
a)Innovations, b)Lack of capital, c)Lack of premises, d)Technology*
5. BDS Supervisor is known as : a) Facilitator, b)Team Leader, *c) Correspondent ,
d)Group leader
6.Under the Revised RBI Guidelines on Priority Sector Lending, loans to food and agro
processing units are classified under a) Agriculture *b) MSME c) Others d) None
7. Under the Revised RBI Guidel ines on Priority Sector Lending, loans to
medium enterprises are not included for the purpose of reckoning of advances
under the priority sector. a) True b) False*
8. Bank loans up to per unit to Micro and Small Enterprises and to Medium
Enterprises under services sector are classified under priority sector. a) Rs 5 and 10
crore* b) Rs 10 and 15 crore c) Rs 10 and 5 crore d) Rs 15 and 10 crore
9. The quantum of loan limit under the revised General Credit Card (GCC) Scheme is
a) 1 lakh b) 2 lakh c) 5 lakh d) no ceiling on the loan amount*
10.The maximum claim settlement under Credit Guarantee Trust Scheme for Micro and
Small Enterprises (CGTMSE) is at Rs lakhs. a) 50 b) 62.5 c) 75 d) 200*
11. MSME loans covered under Guarantee Fund Trust for Micro and Small Enterprises
(CGTMSE) attracts risk weight for capital adequacy purpose: a) Five b) Fifty c)
Hundred d) Zero*
12. Provisioning requirements in respect of Standard Assets under Direct Advances to
agriculture and SME Sectors : a) A general provision of 0.1% of total outstanding
b) A general provision of 0.25% of total outstanding,* c) A general provision of
0.4% of total outstanding d) No provision is required to be made
13. The rate of subsidy under PMEGP scheme ranges from ___% to ___% : a) 10&
15 b) 15 & 20 c) 15 & 35* d) 20& 40
14. Advances to MSMEs up to Rs crore may be done on the basis of credit scoring
model.
a) 1 b) 2* c) 3 d) 4
15. The Chairman of Committee on Financial Architecture for Micro, Small and
Medium Enterprises (MSME) sector set up by Government of India is
a) M V Nair b) K C Chakrabarty c) UshaThorat d) K V Kamath*
16. The small finance bank shall primarily undertake finance to the following entities
a) unserved and underserved sections ,b)small business units, c) unorganized
sector ,d) micro and small industries, e) all the above*
17. MUDRA stands for : a)Metropolitan and Urban Development Regulatory Authority
b)A scheme under Ministry of AYUSH
c)Micro Units Development and Refinance Agency* ,d)None of the above
18. As per RBI guidelines, a MSME unit is treated as sick when
a) any of the borrowal account of the enterprise remains NPA for three months or
more
b) There is erosion in the net worth due to accumulated losses to the extent of 50% of its net
worth, c) Any of the borrowal account of the enterprise remains NPA for 6 months or more. d) a and b*
19. Micro (manufacturing) enterprises are defined as those whose original investment in Plant and
machinery do not exceed Rs. ... a) 5 lakhs b) 10 lakhs c) 25 lakhs *d) 50 lakhs
20. Under the proposed MSMED Amendment Bill, 2014, the revised investment limit in plant and
machinery for micro (manufacturing) enterprises is at Rs
a) 25 lakhs b) 50 lakhs *c)75 lakhs d)100 lakhs
21. Under the Debt Restructuring Mechanism for MSMEs, the following entities will be considered.
a) All non-corporate MSMEs irrespective of the level of dues to banks.
b) All corporate MSMEs, which are enjoying banking facilities from a single bank, irrespective of the
level of dues to the bank.
c) All corporate MSMEs, which have funded and non-funded outstanding up to Rs.10 crore under
multiple/ consortium banking arrangement, d)All the above*
22. The Code of Bank's Commitment to MSE's which set minimum standards of banking and practices
for banks to follow when they are dealing with MSEs has been formulated by a)BCSBI* b) SIDBI c)
RBI d) GOI
23. Which agency provides subsidy for credit rating of SMEs
(a) SIDBI (b) DIC (c) NSIC *d) SMERA
24. Banks are mandated not to accept collateral security in the case of loans upto Rs. extended to units
in the MSE sector. a) 25 lakh b) 10 lakh* c) 5 lakh d) 1 lakh
25. The quantum of loan limit under the revised General Credit Card (GCC) Scheme is
a) 1 lakh b) 2 lakh c) 5 lakh d)no ceiling on the loan amount*
26. The concept of teaching adults is called : a) Anagogy, b) Andragogy*, c) Pedagogy, d) Mystagogy
27. An individual needs the following to perform a task (i)
Knowledge (ii) Skill (iii) Attitude iv) All of these*
28. The first step in training design is the identification of a) Trainee b) Training Needs*
c) Training Institution d) Training Materials
29. Active Methods of Training are, a)Lecture, b)Group Discussion, c) Demonstration, d)Case Study
i) a,b,c ii) b,c,d iii) b,d* iv) a,b,c,d
30. Training can solve all performance problems : a) True b)False*
31. Make in India programme aims : a) To increase GDP growth b) To increase tax revenue.
c) Aims at high quality standards, d) Minimizethe impact on the environment, e) All of these*
32. Governing Council of Skill India Mission is Chaired by a) MSME Minister b) Finance Minister
c) Prime Minister* d) Deputy Chairman of NITI Ayog
33. What is eBiz?
a) A single window IT platform for services of all Central GovtDepts and Ministries**
b) A single window IT platform for services of all State GovtDepts and Ministries
c) A single window IT platform for services of all International Agencies ,d) None of these
34. What is NICDA?
a) National Institute for Coal Development Authority
b) National Industrial Corridor Development Authority**
c) National Information Centre for Data Administration , d) None of these
35. TReDS stands for
a) Treasury Rupee Dealing System
b) Trade Remittance and Discounting System
c) Trade Receivables Discounting System, **d) None of these
36.The total loans and advances extended by commercial banks to Micro
and Small Enterprises for 2014-15 is:a) Rs.8,461 bn, b)Rs.6,872 bn, c) Rs.25,229bn, d)Rs.9,645bn**
37.Small Finance Banks can lend to :
a)Small business units b) MSEs c)Unorganized Sector d)All of these**
38.Ministries/ Govt departments/PSUs to source % of their requirements from MSE units.
a) 10 b)15 c)20** d)5
39.The implementing agencies of CLCSS are : a)SIDBI, b)NABARD c)SIDBI & NABARD d)RBI &**
SIDBI
40.UNIDO has identified industrial clusters for development
a)450 b)288 c)388 **d)121
41.As per MSMED Act, time limit for buyer to make payment to MSMEs is,
a) 60 days b)180 days c)90 days d)45 days**
42.Maximum claim amount settled for micro enterprises with loan upto
Rs.5.00 lakh under CGTMSE is: a)85% *b)80% c)75% d)50%
43.Application for guarantee cover should be lodged with CGTMSE within of loan sanctioned.
A )Next months b) next quarter** c) within six months d) no time limit
44.Pre-requisites for lodging claims with CGTMSE are,
a) Guarantee Cover is in force , b) Account classified as NPA ,c) Recall Notice issued
d) Lock-in period expired**, e) Recovery proceedings initiated : i) a&b, ii)a,b,c iii) a,b,c,d iv)All
45. Debt equity ratio is:
a) Total outside liability/ Tangible Net Worth**
b) Long Term Liabilities/Tangible Net Worth ,c) Both the above , d) None of the above
46. A very high debt equity ratio means the unit is :
a) Having more own funds than outside liabilities**
b) Having more outside liabilities than own funds
c) Having funds surplus ,d) Having no equity at all
47. The debt-equity ratio of a firm has increased (increase in long term sources) along with its current
ratio. Which of the following is certainly true?
a) Sources of funds have been utilised for purchase of fixed assets
b) Sources of funds have been used for payment of current liabilities
c) Sources of funds have been used for payment of current assets ,d) (b) & (c) both**
48. Debt service coverage ratio is (DSCR) :
a) Profit after tax + depreciation - interest on term loan/annual term loan instalment + interest on
term loan
b) Profit before depreciation and Interest / Interest and annual instalment of Term Loan***
c) Profit/debt, d) None of the above
49.Desirable current ratio for a borrower is: a) 1:1 b) 1.33:1 **c) 2:1 d) None of the above
50. If current ratio is above 2:1, it generally means that the firm :
a) Has very high investment in current assets
b) Does not require working capital from the Bank
c) Liquidity is very high , d) All the above**
51. Quick Ratio is:
a) Other name of acid test ratio**
b) Equal to quick assets: quick liabilities
c) Both the above ,d) None of the above
52. Assets turnover ratio of a company is increasing, which indicates:
a) Low capacity utilisation
b) Better capacity utilisation**
c) Increase in liquidity d) None of the above
53. The term Quasi Equity refers toa)
unsecured loans from friends and relatives**
b) unpaid share capital c) capital reserve, d) all of the above
54. An overdraft/cash credit account is considered as NPA if t remains
a) Out of order for more than 90 days **, b)Out of order for more than 180 days
c) Out of order for more than 270 days, d) Out of order for more than 360 days
55. The Standard Provision for MSME loans prescribed by RBI is: a)0.40% b)0.25%**, c)1.00%
d)0.75%
56. SMEs are important for the nation's economy because they significantly contribute to:-
industrial production ,b )exports, c) employment, d) innovation, e) all above**
57. The minimum and maximum members that can exist in a partnership firm are
___________ & _________ : a)2 & 10, b) 2 & 100,** c)2 & 30, d) 2 & 50, e)No restriction
58. Public Ltd Company has minimum shareholders :a)50, b)20, c)100, d)7**
59. MSMED Act was enacted in ________ :a) 2005, b)2008, c)2006**, d)2010
60.Which one of the following activities is not included in Micro & Small (Service)
Enterprises? : a)Professional persons, b)Small business, c)Dairy***, d) Self employed persons
61.PPP denotes ________ :a) Private Public Participation, b) Promoter Partner Participation
c) Public Private Participation,*** d) Partner Private Public
62. Which one of the following stages of development of SMEs regulations are not required?
a)Entry stage, b) Operational stage, c) Manufacturing stage,*** d)Implementation stage
63. LLP stands for _________: a)Long term Liability Participation, b) Limited Liability Partnership**
c) Legitimate Liability Partnership, d)Liability Limited Partnership
64. Composite Loan limit for SSI that can be sanctioned without security is Rs.__: a)1 Mn. , b)2.5 **Mn.
c) 50,000/-, d) Any limit
65. What is the minimum and maximum number of participants in LLP? :a)2, 50, b) 2, 20
c) 2, 100, d)2, unspecified*
66. The organizational set up of SSI came into being in : a)1950 **, b)1954, c) 1969 , d)1975
67. Which one of the following support services are not provided by MSME DO?
a)Training for entrepreneurship development, b)Financial assistance,** c)Tool making
d) Preparation of project and product profiles
68. EDIs stands for ________: a)Export Development Institute, b)Entrepreneurship
Development Institute, **c)Entrepreneurship Development of India, d)Entrepreneurship Design
Instruments
69. Which one of the following organizations is not under the control of the State Government?
a) Directorate of Industries, b)District Industries Centre, c) Technical Consultancy Organization
d)EDII*
70. What is the maximum amount of guarantee available for Micro Enterprise upto credit limit of
Rs. 5.00 Lakh? : a) Rs. 5.00 Lakh**, b)Rs. 3.75 Lakh, c)Rs. 2.50 Lakh, d) Rs. 4.25 Lakh
71. What is 'hurt money'? :a) Equity (***b)Loan, c) Debt d) Venture Capital
72. Hybrid Capital means: a) Equity+ debt,** b)Debt+ loan,
c)Equity+ Venture capital, d)Insurance+ credit card
73. Venture Capital means: a)High Risk Fund, b)Private equity,
c) Dedicated pools of capital privately held,*** d)Share capital
74. Pre-shipment credit refers to : a)Financing ships for export ,b)Payment to supplier before shipment
of goods, c)Working capital finance to enable the exporter to procure material for export,***
d)Financing for repairs to ships
75. Post Shipment Credit refers to: a) Financing the shipping companies, b)Credit posted after shipping
the goods, c)Working capital finance from the time of export to the time of actual***
realization of dues , d) Loans and Advances against documents covering shipment of goods.
76.The objective of Make in India programme is,
a) to encourage companies to manufacture their products in India**
b) to encourage foreign companies to manufacture their products in India
c) to encourage companies to manufacture their products in India and export abroad
d) to encourage companies to manufacture their products in India for domestic markets
77. The Make in India Programme is focusing on sectors of the economy for job creation and skill
enhancement : a) 10 sectors b) 17 sectors c) 22 sectors d) 25 sectors**
78. MSE credit by scheduled commercial banks as per cent of ANBC as at the end of March 2014 stood
approximately at a) 15.0 **b) 30.5 c) 50.5d) 75.5
79. As per 4th NSSO survey, extent of financial exclusion in MSME sector is around
a) 25% b) 50% c)75% d) 93%**
80. Under the Revised RBI Guidelines on Priority Sector Lending,the sub-target for lending to micro
enterprises is fixed at a) 8% b) 9% c)7.5%** d) 7.0%
81. Which one of the following is not a characteristic of a successful cluster? : a) Inter-firm cooperation
b)Cooperation blended with competition , c) Sectoral specialization d)Sharing of capital resources*
82. Which one of the following approaches is not applicable in respect of MSMEs? a) Work together
b)Produce together goods and services, c) Share benefits individually **d)Come together
83. Which one of the following steps is not involved for launching a Cluster Development project?
a) Identification of cluster, b)Capacity building,** c) Creation of cluster, d)Formulation of final selection
84. UNIDO Projects evolve following various steps for promoting networking and development.
i) Mapping the competitiveness, ii)Assisting the cluster's actors for efficient supply chain management
Capacity building , iii) Providing advisory services, iv) Setting special financial institutions for SMEs
a) (i), (iii), (iv), (v) is correct, b)(ii), (iii), (iv), (i) is correct**
c) (iii), (v), (iv), (ii) is correct, d) (v), (i), (ii), (iv) is correct
85. UNIDO stands for : a)United Nations Institution Development Organisation
b)United Nations Innovative Design Organisation
c) United Nations Industrial Development Organisation,** d) None of the above
86. Rehabilitation of a sick unit can be taken up if it : a)creates employment, b) is a profitable unit
c) proves viable after rehabilitation,** d)repays all outstanding dues immediately.
87. Viability should be examined and approved by: a)State level Inter-institutional Committee, b) The
concerned Bank, **Commissioner of Industries of the State Government, d)Association of Sick
Industries
88. OTS scheme refers to : a)Sanctioning of ad hoc limits to the Sick Units, b) Settlement of all
outstanding dues as on a specified date as agreed to between the Bank and the Borrower,***
c) Sanction of rehabilitation package, d)Consortium lending of banks to the sick unit.
89. What is NICDA?
a) National Institute for Coal Development Authority
b) National Industrial Corridor Development Authority**
c) National Information Centre for Data Administration , d) None of these
90.. Securitization means: (Tick appropriately) : a) Pooling of financial assets for forming into a
scrip for sale in a financial market, *b) Pooling of loans of a single borrower, c) Converting loans to
capital of banks, d)Arranging for repayment of dues
91. Which one of the following features of Microfinance is incorrect? : a) Borrowers are from low
income group, b)Long duration loans, ***c)Loans without collaterals, d) High frequency of repayment
92. Relationship banking allows several special contractual features as under:- i) Discretion
,ii)Flexibility
iii) Inclusion of collateral requirements, iv) Decision, v) Use of covenants
a) (i), (ii), (iii) (iv) is correct , b)(ii), (iii), (iv), (v) is correct
c) (v), (iii), (i), (ii) is correct, ***d) (iv), (v), (iii), (i) is correct
93. Which one of the following grey areas of concern for growth is not related to Microfinance sector?
a) Regulation, b)Pricing, c) Cluster formation, d) Technology**
94. Which one of the following factors is not related to pricing?
a) Character of the customer,** b)Elasticity of demand, c) Cost structures, d)Economic conditions
95. SMEs are facing various challenges under WTO regime as under:- i) Technology, ii) Removal of
Quantitative Restrictions, iii) Funding through FDI/JVs, iv) Infrastructure, v)Quality of goods
a) (ii), (i), (v), (iv) is correct,** b) (i), (iii), (v), (ii) is correct, c)(iii), (v), (iv), (i) is correct
d) (iv), (v),(ii), (i) is correct
96 National Bank is maintaining a current account of a Public Trust with 4 trustees. Bank receives an
information that two of them have died in a road accident while going for a pilgrimage. The remaining
trustees now want to operate the account.
a bank would permit them to operate the account as they are now the surviving trustees
b bank will refuse the operations as the power was vested with all of them
c bank will examine the trust deed to determine the future course of action
d if the trust deed allows the surviving trustees to operate the
account they will be allowed. Otherwise the bank would insist on a direction from a competent court
e c and d both***
97. The Secretary of Seth Chanan Mal Public Trust, a reputed trust having 3 Trustees, has approached
you to open a saving bank account in favour of the Trust. While going through the Trust Deed
submitted alongwith the application you find that there is no provision for operation of the bank
account. What would you do under such circumstances ?
a the account would be allowed to be opened by the Secretary
b operation in the account will be allowed jointly with the Chairman of the Trust
c operation can be allowed against the joint signatures of all the Trustees***
d account will be opened only when the trust deed is modified.
e account cannot be operated in the absence of any provision
98. Ramesh and Ashok are trustees of a trust and execute a power of attorney in favour of Tarun.
Trust deed is silent regarding the delegation of power. Tarun comes to operate the account:
a Tarun can be permitted to operate the account
b Tarun can be permitted after obtaining consent of beneficiaries.
c Tarun cannot be permitted to operate.*
d Tarun can be allowed if credit balance is there. e b and d
99. Universal Bank is having a current account of Dhara Charitable Trust which is operated by their
two trustees. In road accidents, both the trustees expire and this fact comes to the notice of the bank.
What precautions should be taken by the bank for future operations in the account?
a the beneficiaries will have to appoint another trustee and on the basis of their resolution the
next trustee would be allowed to operate the account.
b the beneficiaries will be allowed to operate the account themselves.
c the operations in the account will be stopped
d the beneficiaries will be told to approach a court for appointment of new trustee in case the
trust deed is silent about this** e b and c
100. Your branch receives from the trustees of a trust, a resolution passed by the trustees resolving that the
current account would be operated by two out the three trustees, as the Td trustee is proceeding abroad. The
account is presently operated by all the three in terms of the trust deed.
a the bank will accept the resolution and the request and permit the remaining trustee to operate the
account, strictly as per the resolution.
b the bank will not accept the resolution since the Trust Deed provides for operation of
the account by all the three***
c the bank will not accept the resolution and will suggest for power of attorney to be given by the third
trustee.
d the bank will allow operations, since they are working as agents. e none of the above
101 A partnership firm with three partners, named M/s Durani Brothers opened a current account with
Corporate Bank with the operational instruction that 151 two partners will operate the account. The firm
received a cheque in its favour and in order to meet the urgent payment requirement, on behalf of M/s
Durani Brothers, the 3Ni partner endorsed the same in favour of another firm M/s Shivani Cables, from
whom the raw material was purchased:- a Shivani Cables will become holder in due course if it
is not known to them that the 3rd partners has no authority to endorse, b Shivani Cables will not
become holder in due course if they know that only 1st and 2nd partner have authority to operate the
bank account, c Shivani Cables's title will remain doubtful in all circumstances, d a and b,
e a to c***
102 Universal Bank has granted cash credit limit of Rs:10 lac to M/s Kale Traders, a partnership
firm. The account is showing a debit balance of Rs.9.50 lac when the notice is received about the
insolvency of one of the partners. Which among the following steps should be initiated by the bank to
safeguard its interest? a account should be recalled and party be asked to adjust the
account, b operations in the account to be stopped and balance confirmation letter to be
obtained from all the partners, c operations in the account to be stopped and notice of
demand to be issued on the remaining partners, d notice about the outstanding dues
to be sent to the official assignee in whom the estate of the insolvent partner has been vested,
e c and d above**
103 Your branch maintains a current account in the name of M/s Site Ram Gita Ram & Sons. A new
partner, the younger son of Mr. Gita Ram joins the firm and bank gets information about this
development. Which among the following actions would be more appropriate to deal with this
account:- A operations in the account should be stopped failing which the rule in Clayton case can
apply, B account should be closed and new account should be opened observing all formalities
C new partner can be admitted with the approval of the bank only. Hence the firm should be advised
to obtained permission from the bank, d bank can obtain new partnership declaration
letter and allow operations as per new mandate, **e bank can insist on for new partnership
deed duly registered with Registrar of firms
104 Two partners of a partnership firm M/s Hyderabad Trading Company with three partners,
approaches you to open a current account with initial deposit of Rs.10 lac and promise that the
signatures on the account opening, form shall be obtained on the return of 3rd partner from abroad,
although the said partner is not to actively engage himself in the business and he will function as a
dormant partner. They also do not have any partnership deed in writing.
A the bank will open the account as the 3rd partner is not to operate the account
B the bank will open the account and will not permit any withdrawaltill the 3rd partner signs the account
opening form C the account will be opened but cheque book will be given when the 3rd partner returns,
D the account will not be opened unless all the partners have signed, E none of the above**
105 Capital Bank maintains a current account of M/s Bihari Lal Sham Lai with the same name
partners having operating instructions as 'any one can operate'. Mr. Sham Lai informs the bank that
due to some dispute amongst the partners, the cheques signed by Mr. Bihari Lal should not be paid
as he has acquired the whole share from Mr. Bihari Lal and is shortly introducing another partner.
Meanwhile a cheque signed by Mr. Sham Lal is presented for payment. What should the bank do?
A The operations in the account will be stopped and the mandate for operation of the
account by any one, shall become inoperative, ***B The operations in the account will be stopped
only after receipt of the notice from both of them. C The cheque signed by Mr. Sham Lal shall be
passed since he has acquired the whole share now, D The partners will be advised to sort out the issue
