Module: General Practice
Q14: Consider the following statements regarding the Hybrid Security model under the CGTMSE scheme:
Assertion (A): Member Lending Institutions can obtain collateral security for a part of the credit facility and still avail CGTMSE guarantee cover for the remaining unsecured portion.
Reason (R): The scheme aims to support loans up to 10 Crore rupees even if the borrower lacks collateral to cover the entire loan amount, provided the guaranteed portion does not exceed the scheme's ceiling.
Reason (R): The scheme aims to support loans up to 10 Crore rupees even if the borrower lacks collateral to cover the entire loan amount, provided the guaranteed portion does not exceed the scheme's ceiling.
✅ Correct Answer: A
Both statements are true and R explains A. With the loan limit increased to 10 Crore rupees, very few MSMEs can offer full collateral, yet banks are hesitant to lend such large amounts completely collateral-free.
The Hybrid Security model allows a Partial Collateral arrangement.
For example, if a borrower needs 8 Crore but has collateral worth only 3 Crore, the bank can take the 3 Crore collateral and seek CGTMSE cover for the remaining 5 Crore unsecured portion.
This approach enables larger ticket lending.
The Hybrid Security model allows a Partial Collateral arrangement.
For example, if a borrower needs 8 Crore but has collateral worth only 3 Crore, the bank can take the 3 Crore collateral and seek CGTMSE cover for the remaining 5 Crore unsecured portion.
This approach enables larger ticket lending.