Which of the following truly describe government intervention in the MSME space in view of the COVID-19 pandemic?
A. Provisioning of collateral-free automatic loans worth Rs. 3 lakh crores
B. Provision of 100% credit guarantee coverage to banks and NBFCs on principal and interest for loans to NBFCs
C. Redefined MSMEs to include both investment and turnover criteria
D. Created a war chest of Rs. 3,00,000 crores for MSME loans and employment protection
E. Allocated Rs. 3,00,000 crores for MSME loan moratorium and waiver
Choose the correct answer from the options given below:

Correct option is A

A. Provisioning of collateral-free automatic loans worth Rs. 3 lakh crores:
· True. In response to the COVID-19 pandemic, the Government of India introduced a scheme to provide collateral-free automatic loans to MSMEs, worth Rs. 3 lakh crores, aimed at providing liquidity to businesses struggling due to the pandemic.
B. Provision of 100% credit guarantee coverage to banks and NBFCs on principal and interest for loans to MSMEs:
· True. Along with the loan provisioning, the government also announced 100% credit guarantee coverage to banks and Non-Banking Financial Companies (NBFCs) on the principal and interest for loans provided to MSMEs, encouraging lenders to support MSMEs.
C. Redefined MSMEs to include both investment and turnover criteria:
· True. The government also redefined the criteria for MSMEs, allowing both investment and turnover criteria to determine the classification of MSMEs. This expansion helped more businesses qualify for the MSME benefits.
D. Created a war chest of Rs. 3,00,000 crores for MSME loans and employment protection:
· False. While there was a significant package for MSMEs, the figure mentioned here and the term "war chest" is not accurate. The amount allocated for MSME loans was Rs. 3 lakh crores, but it did not cover employment protection in the way this statement implies.
E. Allocated Rs. 3,00,000 crores for MSME loan moratorium and waiver:
· False. There was no loan moratorium and waiver under the Rs. 3 lakh crore MSME loan provision. The loans were provided to MSMEs but there wasn't a broad-based loan waiver or moratorium specifically mentioned for MSMEs under this scheme.
Information Booster:
1. Collateral-Free Loans: This initiative helped MSMEs by making it easier to access loans without the need for assets as collateral, a significant barrier for many small businesses.
2. Credit Guarantee Scheme: The credit guarantee provided by the government helped mitigate the risk for banks and NBFCs, making them more willing to lend to MSMEs during the economic uncertainty created by COVID-19.
3. Redefining MSME Criteria: The inclusion of turnover in the definition, alongside investment limits, allowed more businesses to qualify as MSMEs and gain access to benefits such as loans and tax relief.
4. Boost to MSMEs: These steps were essential in ensuring that MSMEs, which form a large part of India's economy, had the necessary financial support to survive the financial crunch caused by the pandemic.
5. Employment Protection Schemes: Although some government schemes addressed employment, the Rs. 3 lakh crore figure was specifically targeted for MSME loans and not directly related to job protection.
6. Loan Moratorium vs. Loan Provisioning: The loan moratorium schemes generally applied to broader sectors of the economy and did not include loan waivers, which would undermine the financial system's stability.