BUSINESS ADMINISTRATION
BUSINESS ENVIRONMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Finance gap
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Liabilities gap
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Credit gap
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Assets gap
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Detailed explanation-1: -Credit gap is the difference between the total addressable demand for external credit compared to the overall supply of finance from the formal sources.
Detailed explanation-2: -In India, the overall credit gap in the MSME sector is INR 25 trillion while the overall debt demand by MSMEs in India is Rs 69.3 trillion, growing at 11.5% CAGR. The report also highlighted that the sector is expected to witness increased participation from private sector banks and NBFCs.
Detailed explanation-3: -The credit gap, defined as the deviation of the credit-to-GDP ratio from a one-sided HP-filtered trend, is a useful indicator for predicting financial crises. Basel III therefore suggests that policymakers use it as part of their countercyclical capital buffer frameworks.
Detailed explanation-4: -Deficit financing is defined as a situation in which the government spends more than the revenue, the difference being made by borrowing or minting new funds. Hence, funds are borrowed from the Reserve Bank of India.
Detailed explanation-5: -Under the scheme, banks provide promoters of stressed MSMEs with subordinate debt up to 15% of promoter’s stake or Rs. 75 lakh, whichever is lower to be infused as equity/quasi equity in the business.