Under CGFMU, the annual guarantee fee for lending institutions has been reduced to what level?
- A.0.25 per cent
- B.0.50 per cent
- C.0.75 per cent
- D.1.25 per cent
Correct answer
Explanation
The correct answer is 0.75 per cent a year, down from 1 per cent a year earlier. A lower fee reduces the cost a lending institution has to carry for buying guarantee cover, and that cost is ultimately reflected in what the micro borrower pays. Option A, 0.25 per cent, and option B, 0.50 per cent, are the rates that apply to Self Help Groups, who pay 0.25 per cent in the first year and 0.50 per cent in subsequent years, and for whom the Cabinet made no change at all. Option D, 1.25 per cent, is higher than even the earlier rate and matches nothing in the decision. Remember also that cover is tied to the disbursed amount for a working capital limit and to the outstanding amount for a term loan, so that it mirrors the real exposure of the lender.
Read the full article: Cabinet Clears Rs 5,000 Crore CGFMU Corpus for Mudra Loans
Practice Questions
What corpus has the Union Cabinet approved for the Credit Guarantee Fund for Micro Units?
- A.Rs 3,000 crore
- B.Rs 4,111 crore
- C.Rs 5,000 crore
- D.Rs 7,500 crore
Show answer
The Cabinet cleared this corpus while extending the Credit Guarantee Fund for Micro Units up to 31 March 2031, and the Ministry of Finance expects it to support Mudra lending of Rs 12.6 lakh crore over the five years.
Read the full explanation →Through which body is the CGFMU guarantee extended to lending institutions?
- A.Small Industries Development Bank of India
- B.National Credit Guarantee Trustee Company Limited
- C.National Bank for Agriculture and Rural Development
- D.Reserve Bank of India
Show answer
The Credit Guarantee Fund for Micro Units gives lending institutions cover against default risk, and that cover is routed through NCGTC, which acts as the trustee for the fund.
Read the full explanation →On which stock exchanges is the equity share capital of the acquirer listed?
- A.Only the National Stock Exchange of India
- B.Only the Bombay Stock Exchange
- C.The Bombay Stock Exchange and the National Stock Exchange of India
- D.The Calcutta Stock Exchange and the Bombay Stock Exchange
Show answer
Kotak Mahindra Bank is described as a scheduled commercial bank licensed by the central bank to carry on banking business, with its equity share capital listed on both these exchanges.
Read the full explanation →Which regulator approved the acquisition of a part of Deutsche Bank India business by Kotak Mahindra Bank?
- A.Securities and Exchange Board of India
- B.Reserve Bank of India
- C.Competition Commission of India
- D.Insurance Regulatory and Development Authority of India
Show answer
The competition regulator cleared the proposed combination, which covers both the purchase of the target business and the related referral arrangements between affiliates of the two sides.
Read the full explanation →Which business of Deutsche Bank in India is being acquired by Kotak Mahindra Bank?
- A.Corporate and investment banking
- B.Retail, private banking and wealth management
- C.Custody and fund accounting
- D.Treasury and foreign exchange dealing room
Show answer
The target business is precisely the retail banking and private banking segment together with the wealth management arm that the seller runs through its branches in India, and it is moving as a going concern on a slump sale basis.
Read the full explanation →