Role Of Priority Sector And MSME In The Indian Economy JAIIB MCQs | Paper I – Indian Economy & Indian Financial System

IE&IFS Chapter 4 Role of Priority Sector and MSME in the Indian Economy

Test your knowledge of Chapter 4: Role of Priority Sector and MSME in the Indian Economy with this JAIIB MCQs Practice Pack, covering key topics such as: 📌 Topics Covered:

Definition & Role of Priority Sector
List of Priority Sectors identified in India
Priority Sector Lending Norms
Definition of MSME
Role & Significance of MSME in economic development
Contribution of MSME in GDP
Recent Initiatives in MSME sector viz., Atmanirbhar Bharat package, Make in India, Start-up India, Stand-up India etc. ✅ Correct answers with explanations are provided at the end for effective revision. Sharpen your preparation, identify weak areas, and build exam confidence with these practice questions. Stay consistent. Stay exam-ready. 📚 For more daily quizzes, PDFs, and complete JAIIB study material, visit bankingshiksha.com.

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1. What is the primary purpose of designating certain sectors of the economy as "Priority Sectors" for lending by banks?

A. To provide credit exclusively to large corporations to boost industrial growth.

B. To ensure that important, employment-intensive sectors and weaker sections of society receive adequate and timely bank credit.

C. To fund government infrastructure projects exclusively.

D. To encourage banks to lend only to the most profitable sectors of the economy.

2 / 10

2. The revised definition for Micro, Small, and Medium Enterprises (MSMEs), effective from July 1, 2020, is based on which composite criteria?

A. The number of employees and the geographical location of the enterprise.

B. The type of product manufactured and the annual profit.

C. The investment in plant & machinery or equipment and the annual turnover.

D. The age of the enterprise and the educational qualification of the owner.

3 / 10

3. What is the main objective of the "Stand-Up India" scheme launched by the government?

A. To provide financial assistance to all small businesses in urban areas.

B. To encourage large corporations to invest in rural infrastructure.

C. To promote entrepreneurship specifically among Scheduled Castes, Scheduled Tribes, and women.

D. To provide skill development training for workers in the organized sector.

4 / 10

4. The Production Linked Incentive (PLI) Scheme is designed to boost domestic manufacturing by providing what kind of benefit?

A. A one-time grant to all new manufacturing companies.

B. A subsidy on the electricity consumed by the company.

C. An exemption from all corporate taxes for the first five years.

D. A financial incentive based on the incremental sales of goods manufactured in India.

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5. In the context of Priority Sector Lending norms, ANBC is a key metric against which targets are set. What does the term "Adjusted Net Bank Credit" (ANBC) primarily represent?

A. The total profit of a bank after all adjustments.

B. The total deposits held by a bank.

C. A bank's total loans and advances, adjusted for certain specific items as per RBI norms.

D. The total value of a bank's off-balance-sheet exposures.

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6. Complete the following sentence: While domestic commercial banks have a total priority sector lending target of 40% of their ANBC, Regional Rural Banks (RRBs) are required to meet a significantly higher target of __________%.

A. 50

B. 60

C. 75

D. 80

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7. Complete the following sentence: The government has simplified the registration process for MSMEs through a fully online and paperless portal based on self-declaration, which is known as the __________ Registration Portal.

A. MSME Seva

B. Udyam

C. Bharat

D. Vikas

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8. Which of the following statements about the categories identified as Priority Sectors is TRUE?

A. Lending to large-scale corporate industries is a key priority sector.

B. The 'Social Infrastructure' category includes lending for projects like schools and drinking water facilities.

C. The import of luxury cars is classified under the 'Export Credit' category.

D. Only agricultural loans to small and marginal farmers are considered part of the priority sector.

9 / 10

9. Which of the following statements about the benefits offered under the "Start-Up India" scheme is TRUE?

A. It provides a guaranteed government contract to all registered startups.

B. It offers a 100% reduction in the cost of filing a patent for a lifetime.

C. It provides an income tax exemption for a period of 3 years for eligible startups.

D. The scheme is exclusively available for technology-based startups in metro cities.

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10. use the following table to find the correct match.

Column A (Scheme)	Column B (Primary Objective/Feature)
1. Make in India	a. Promote entrepreneurship among SC/ST and women.
2. Stand-Up India	b. Provide collateral-free automatic loans during the pandemic.
3. Atmanirbhar Bharat (ECLGS)	c. Transform India into a global manufacturing hub.
4. Start-Up India	d. Offer a tax holiday for new ventures.

Question 10: From the table above, which of the following is a correct match?

A. 1-b

B. 2-a

C. 3-d

D. 4-c

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