Read the passage given below and then answer the questions given below the passage. Prime Minister Narendra Modi’s Diwali package for micro, small and medium enterprises (MSMEs) may be late in the day, but it’s nevertheless a boon, particularly the interest subvention and the measures t

Read the passage given below and then answer the questions given below the passage.

Prime Minister Narendra Modi’s Diwali package for micro, small and medium enterprises (MSMEs) may be late in the day, but it’s nevertheless a boon, particularly the interest subvention and the measures to see that bills are paid on time. Why the need to boost lending to the MSME sector? Simply put, non-banking financial companies (NBFCs) have increased their share of financing MSMEs in recent years and the current lack of lending to NBFCs threatens to cut off credit to a substantial number of MSMEs too.

The data shows bank lending to micro and small-scale industrial units fell from 3.1% of gross domestic product (GDP) in 2013-14 to 2.22% in 2017-18. Over the same period, bank lending to medium-scale industrial units fell from 1.1% of GDP to 0.62%. But this decline is part and parcel of the credit cycle and indeed lending to large industrial units as a percentage of GDP saw a larger decline, doubtless because of the Reserve Bank of India’s (RBI’s) asset quality review.

Interestingly, RBI data shows that in the priority sector, bank credit to SMEs in the manufacturing sector as at end-September 2018 contracted by 1.4% from a year ago. In sharp contrast, bank credit to SMEs in the services sector grew at a good 17%. This mirrors the overall weakness in manufacturing and the buoyant conditions in the services sector.

While bank lending to MSMEs was tepid, NBFCs stepped in. The share of NBFCs in total finance to MSMEs went up from 7.9% in December 2015 to 9.6% as on June 2017 and then spurted to 11.3% by June 2018. This was aided by bank lending to NBFCs, which grew by 26.9% in 2017-18. Now that NBFCs are suffering from a lack of liquidity caused by contagion from the Infrastructure Leasing and Financial Services Ltd’s debacle, the government is attempting to ensure that credit channels to MSMEs remain open.

One reason why public sector banks are reluctant to lend to MSMEs is that a substantial proportion of these loans go bad. According to the MSME Pulse report, for public sector banks, the level of non-performing assets (NPAs) among MSMEs went up from 13% in June 2016 to 15.2% in June 2018. Public sector banks accounted for half the total credit given to MSMEs. The credit quality of MSMEs availing loans from private sector banks and NBFCs is significantly better and as of June 2018, their NPA levels on account of MSME loans were 3.9% and 5%, respectively.

Consider the following statements. Which of these are INCORRECT?

A. Bank lending to MSME units fell to 2.22% of gross domestic product (GDP) in 2017-18.

B. The share of NBFCs in total finance to MSMEs went up to 9.6% as on June 2017.

C. RBI data shows that in the priority sector lending, bank credit to MSMEs in the services sector grew at 15%.

1). Only A
2). B and C
3). Only C
4). A and B

---

Join Telegram Group

Answer This Question
Name:
Email:
Answer :
Sum of (2+2)
Submit:

Other Questions

1. Apart of a sentence is underlined. Out of the given options, select the one, which when substituted in place of the underlined part, can improve the sentence. If no improvement is possible, select option (4). He is ill of malaria.

2. To get into hot water

3. Rearrange the parts of the sentence in correct order.  Disadvantage of wired telephone  P: due to the line breakage  Q: connection is the loss  R: of connectivity during disasters 

4. Read the passage carefully and choose the best answer to each question out of the four alternatives. As the 23rd conference of the UN Framework Convention on Climate Change in Bonn shifts into high gear, developing countries including India are focussing on the imperatives of ensuring adequate fin

5. In the following passage there are blanks each of which has been numbered These numbers are printed below the passage and against each five words/phrases are suggested one of which best fits the blanks appropriately Find out the appropriate word/phrase in each case. Economic growth figures for the

6. In the following questions four words are given in bold. One of these words given in bold may be wrongly spelt or inappropriate in the context. Find out that word. If all the words are correct, choose ‘All correct’ as the answer. The students were grateful (1)/ to such a knowledgable (2)/ professor (3)/ of their varsity. (4)/ All correct (5)

7. Winter was so bad that the nomadic tribesmen found it difficult to keep the wolf from the door .

8. Read the following passage carefully and answer the questions given below it.Certain words/phrases have been printed in bold to help you locate them while answering some of the questions.Princess Chandravati was very beautiful. She loved all kinds of ornaments and always wanted to wear the most prec

9. In the following question, four words are given out of which one word is incorrectly spelt. Select the incorrectly spelt word.

10. Thought the Cold War has ended selective tactics are still continuing for ensuring the military and economic dominance of developed countries Various types of technology denial regimes are still being enforced which are now being mainly targeted against developing countries like India Today we in I