SIDBI Grade A & B: Learn the subjects, not just the dates.
Build real command over SIDBI, MSME classification, lending, working capital, ratios, NPAs and banking regulations. Read compact theory, work through numerical examples and test yourself with explained MCQs.
Use this hub in the right order
Read a concept, test it with a numerical or scenario, and revise through questions. Do not mistake the recruitment information for a full study programme.
Exam scheme: 2025 Grade A/B baseline
This is the published 2025 selection pattern for Grade A and Grade B; a later notification can change the scheme. General, Legal and IT have different stream-specific content.
Seven sections; 200 questions
| Section | Questions | Marks | Type |
|---|---|---|---|
| English Language | 30 | 30 | Qualifying |
| Reasoning Aptitude | 25 | 25 | Qualifying |
| Quantitative Aptitude | 25 | 25 | Qualifying |
| Computer Knowledge | 20 | 20 | Qualifying |
| GA: Banking/finance/ESI | 20 | 20 | Merit |
| MSME policy, finance & management | 30 | 30 | Merit |
| Stream-Specific Test | 50 | 50 | Merit |
| Total | 200 | 200 | — |
Important: In the 2025 scheme, shortlisting for Phase II was based on the merit-section score alone, subject to qualifying requirements. A ¼-mark-of-question penalty applied to incorrect objective answers.
Descriptive and objective assessment
| Paper | Content | Marks |
|---|---|---|
| I | English: essay, précis, comprehension and business/office correspondence | 75 |
| II-A | MSME policy, regulation, finance and management; objective | 75 |
| II-B | MSME finance and development topics; descriptive | 50 |
| Phase II total | Two papers | 200 |
| Phase III | Interview | 100 |
Final ranking: Phase-II and interview performance were used. SIDBI also provided for a psychometric assessment before interviews. Grade B Legal and IT have specialist content; read their separate official tables.
Six core SIDBI lessons
Each lesson contains definitions, distinctions, examples and exam traps. They are written as transferable study material rather than a recruitment advertisement.
SIDBI and its mandate
SIDBI was established on 2 April 1990 under an Act of Parliament. Its role is promoting, financing and developing micro, small and medium enterprises, and coordinating institutions engaged in similar work.
The bank is not simply a commercial bank focused on deposits. It functions as an MSME-focused development financial institution, using finance and institution-building to improve access to credit and competitiveness.
Its principal channels include indirect finance through banks, SFBs, NBFCs, MFIs and fintechs; direct MSME lending; support to startup investment funds; and non-credit development interventions. Each solves a different market gap.
An institution refinancing an NBFC is providing funds to a lender, which then finances MSMEs. A direct SIDBI loan creates a direct SIDBI–borrower relationship. A credit guarantee reduces the lender’s potential loss on eligible loans; it is not itself a loan.
Read the supporting reference ↗MSME classification after April 2025
MSME classification in India now uses a composite test of investment in plant and machinery/equipment and turnover. Both limits must be satisfied for the relevant class; exceeding either limit pushes the enterprise outside that class.
For Micro, investment must not exceed ₹2.5 crore and turnover must not exceed ₹10 crore. For Small, investment must not exceed ₹25 crore and turnover must not exceed ₹100 crore. For Medium, investment must not exceed ₹125 crore and turnover must not exceed ₹500 crore.
Example: an enterprise with ₹2 crore investment and ₹14 crore turnover is not Micro even though its investment is below the Micro limit. It may fall in Small if the remaining statutory conditions are met. Likewise ₹30 crore investment with ₹80 crore turnover is outside Small and may fall in Medium.
The revised thresholds took effect from 1 April 2025. Avoid memorising older ₹1/₹10/₹50 crore investment limits as the current rules.
Read the supporting reference ↗How MSME finance works
Credit appraisal asks whether an enterprise needs funds for a productive purpose and is likely to repay them from cash generated by its operations. This is broader than checking whether the borrower offers sufficient collateral.
A lender reviews the business model, promoter background, banking conduct, repayment history, financial statements, receivables, inventory, existing liabilities, projected cash flows and sensitivity to risk. Know Your Customer (KYC) checks help establish identity and assess relevant compliance risk.
Term loans typically fund relatively long-lived assets such as plant and machinery. Working-capital finance supports recurring needs such as inventory and trade receivables. A profitable enterprise may still face a liquidity crunch when buyers pay slowly.
Understand five lending risks: credit risk (default), liquidity risk (timing mismatch), market risk (rates and prices), operational risk (process failure) and concentration risk (overexposure to a single buyer/industry).
Read the supporting reference ↗Ratios and credit interpretation
The current ratio compares current assets with current liabilities. A current ratio of 1.5 means ₹1.50 of current assets for every ₹1 of short-term liabilities, but the quality of receivables and inventory also matters.
Debt-to-equity compares debt with owners’ equity. A high ratio generally indicates greater leverage, but appropriate interpretation differs by industry, maturity and cash-flow stability.
DSCR compares funds available for debt service with obligations for interest and principal repayments, using a consistently defined numerator and denominator. A DSCR above 1 indicates coverage in that period; its robustness depends on the assumptions behind future cash flow.
Cash profit, accounting profit and free cash are different. A borrower may show profit while money is trapped in unpaid invoices. This distinction explains the importance of receivables ageing, collection efficiency and cash-flow projections.
Read the supporting reference ↗NPA, provisioning and recovery
A non-performing asset (NPA) is a bank asset subject to RBI’s applicable income recognition and asset classification standards. For a standard term loan, principal or interest overdue for more than 90 days is a common trigger; other facilities and exceptions follow the relevant norms.
IRAC stands for Income Recognition, Asset Classification and Provisioning. Broad asset classes include standard, substandard, doubtful and loss assets under applicable norms. Distinguish classification from recovery action; these are related but not identical processes.
Provisioning recognises expected regulatory loss allowances against risky assets. Recovery tools may include follow-up, restructuring where permitted, enforcement of security, settlement and applicable legal mechanisms such as SARFAESI, depending on eligibility.
Do not assume every 90-day delinquency rule applies identically to every loan product or institution. Read RBI’s extant directions for the lender and exposure concerned.
Read the supporting reference ↗Guarantees, TReDS and credit delivery
CGTMSE is the Credit Guarantee Fund Trust for Micro and Small Enterprises, jointly set up by the Ministry of MSME and SIDBI. Eligible member lending institutions extend credit; the trust provides guarantee cover under scheme terms. CGTMSE does not ordinarily disburse the underlying enterprise loan.
TReDS stands for Trade Receivables Discounting System. It enables eligible MSME sellers to obtain early funds against buyer-accepted trade receivables. Sellers, buyers and financiers participate on an electronic platform.
In a simplified TReDS transaction, an MSME supplies goods, an invoice is accepted, financiers bid, one financier pays the MSME at a discount, and the buyer settles with the financier on the due date. RBI states TReDS transactions are without recourse to MSME sellers.
Udyam is the Government of India’s MSME registration system. Formal identification, transaction records, credit guarantees and receivables finance can work together to lower information and collateral barriers.
Read the supporting reference ↗MSME definition: memorise the CURRENT thresholds
From 1 April 2025, classification is based on both investment and turnover. The previous 2020 thresholds are still reproduced in older notes, so always check the effective date.
| Enterprise | Investment ceiling | Turnover ceiling | Old 2020 limits (investment / turnover) |
|---|---|---|---|
| Micro | ₹2.5 crore | ₹10 crore | ₹1 crore / ₹5 crore |
| Small | ₹25 crore | ₹100 crore | ₹10 crore / ₹50 crore |
| Medium | ₹125 crore | ₹500 crore | ₹50 crore / ₹250 crore |
Six examples you should be able to solve
SIDBI’s General-stream syllabus explicitly includes ratios, credit appraisal, working capital, MSME finance and related banking topics. Practise calculations together with interpretation.
1. Working capital
Working capital = Current Assets − Current Liabilities. If current assets are ₹180 lakh and current liabilities ₹120 lakh, net working capital is ₹60 lakh. The current ratio is 180/120 = 1.50. The enterprise has positive net working capital, but receivables and inventory quality determine whether it can meet payments on time.
2. Loan leverage
If total debt is ₹90 lakh and equity ₹45 lakh, debt/equity = 2.0. A lender should evaluate cash generation, interest costs, repayment schedule and operating volatility before judging whether this leverage is excessive.
3. Repayment coverage
Suppose projected funds available for debt service are ₹24 lakh and scheduled debt service is ₹16 lakh: DSCR = 24/16 = 1.50. Coverage greater than 1 is favourable in isolation, but the lender must stress-test sales assumptions and interest-rate changes.
4. Receivables discounting
An MSME has an accepted invoice of ₹10 lakh payable after 60 days. If a financier discounts it at a simple illustrative annual rate of 12% using a 365-day year, the approximate discount is ₹10,00,000 × 12% × 60/365 = ₹19,726; proceeds before other fees ≈ ₹9,80,274. Actual TReDS bids, fees and day-count conventions vary.
5. MSME classification trap
Investment of ₹2 crore and turnover of ₹14 crore fails the Micro turnover limit of ₹10 crore, even though Micro investment conditions are met. Because both figures remain below the Small limits of ₹25 crore/₹100 crore, the enterprise may qualify as Small, subject to other applicable requirements.
6. Term loan versus working capital
Buying new machinery for a multi-year production line points toward term finance. Financing cotton purchases, wage payments and customer credit during a repeating operating cycle points toward working capital. Correct purpose matching matters for structure, tenure and repayment.
In an exam, always identify the scope of “debt”, the accounting period and the DSCR definition specified by the question.
Phase-II descriptive writing workshop
Build answers with a precise definition, the mechanism, one numerical or institutional example, limitations and a conclusion. These are original practice tasks, not official PYQs.
Why does a growing MSME sector still face a significant formal credit gap?
Answer structure: Define the gap; discuss cash-flow volatility, weak documentation, collateral and information asymmetry; evaluate refinance, credit guarantees, Udyam, TReDS and digital lending; conclude with safeguards against over-indebtedness.
Differentiate direct lending, refinance and credit guarantee mechanisms with MSME examples.
Answer structure: Define each intervention and who bears credit risk; explain SIDBI lending through intermediaries versus directly to an enterprise; show why guarantee cover is neither a grant nor automatic loan approval.
A borrower has rising sales but worsening receivables ageing. What should a bank examine?
Answer structure: Assess invoice quality, customer concentration, debtor days, operating cycle, GST/bank-statement consistency, working-capital gap, repayment history, stress cases and covenant structure.
Explain how TReDS can address delayed payments to MSMEs.
Answer structure: Outline buyer-accepted invoices, financier bidding and discounted payment; highlight liquidity, competition and traceability benefits; discuss limitations including buyer onboarding and invoice disputes.
Write a 200-word office note recommending a credit-awareness workshop for MSMEs.
Answer structure: Use heading, purpose, proposed audience, session plan (Udyam/CGTMSE/TReDS/financial literacy), implementation timeline and formal approval request; maintain neutral, concise and official English.
Apply what you have learnt
These are newly written concept and numerical questions; they are not represented as actual SIDBI previous-year questions. Each answer includes a short explanation.
- 1982
- 1990
- 2006
- 2015
Show answer and explanation
Answer: B. 1990 — SIDBI was established on 2 April 1990.
- Regulation of mutual funds
- Promotion, financing and development of MSMEs
- Issuance of Indian currency
- Administration of direct taxes
Show answer and explanation
Answer: B. Promotion, financing and development of MSMEs — SIDBI’s statutory development-finance mandate focuses on MSMEs and coordination of related institutions.
- Direct lending
- Indirect lending
- Direct government subsidy
- Tax assessment
Show answer and explanation
Answer: B. Indirect lending — Indirect lending works through banks, NBFCs, SFBs, MFIs and similar intermediaries.
- ₹1 crore and ₹5 crore
- ₹2.5 crore and ₹10 crore
- ₹10 crore and ₹50 crore
- ₹25 crore and ₹100 crore
Show answer and explanation
Answer: B. ₹2.5 crore and ₹10 crore — Under the new composite classification, the Micro limits are ₹2.5 crore investment and ₹10 crore turnover.
- Micro
- Small
- Medium
- Not an MSME in any circumstances
Show answer and explanation
Answer: B. Small — Turnover exceeds the Micro ceiling of ₹10 crore, but both measures lie within the Small limits.
- ₹10 crore and ₹50 crore
- ₹25 crore and ₹100 crore
- ₹50 crore and ₹250 crore
- ₹125 crore and ₹500 crore
Show answer and explanation
Answer: B. ₹25 crore and ₹100 crore — Small enterprises must remain within both the ₹25 crore investment and ₹100 crore turnover limits.
- It remains Micro
- It cannot be classified as Micro
- Its turnover is ignored
- It automatically becomes Medium
Show answer and explanation
Answer: B. It cannot be classified as Micro — The criteria are composite; both limits must be met.
- Working-capital cash credit only
- Term loan
- Trade receivables discounting
- Overdraft on salary
Show answer and explanation
Answer: B. Term loan — Term finance is typically used for long-lived capital investment.
- Long-term capital expenditure
- Working-capital requirement
- Equity dividend
- Depreciation
Show answer and explanation
Answer: B. Working-capital requirement — Working capital bridges the operating cash cycle between outflows and collections.
- 0.67
- 1.25
- 1.5
- 2.0
Show answer and explanation
Answer: C. 1.5 — Current ratio = 180 ÷ 120 = 1.5.
- 0.5
- 1.0
- 2.0
- 3.0
Show answer and explanation
Answer: C. 2.0 — Debt-to-equity = 90 ÷ 45 = 2.0.
- 0.67
- 1.25
- 1.5
- 2.0
Show answer and explanation
Answer: C. 1.5 — With these specified amounts, DSCR = 24 ÷ 16 = 1.5.
- Always an accounting fraud
- Liquidity/receivables management
- Excessive government securities
- An increase in book equity
Show answer and explanation
Answer: B. Liquidity/receivables management — Accounting profits do not ensure immediate cash receipts.
- 30
- 60
- 90
- 180
Show answer and explanation
Answer: C. 90 — More than 90 days overdue is the commonly tested term-loan criterion, subject to RBI’s relevant product-specific norms.
- Interest Rate and Credit
- Income Recognition, Asset Classification and Provisioning
- Insurance Risk and Capital
- Industrial Regulation of Accounts and Companies
Show answer and explanation
Answer: B. Income Recognition, Asset Classification and Provisioning — IRAC is a core set of prudential rules on recognition, classification and provisioning.
- SEBI
- Ministry of MSME, Government of India
- Election Commission
- National Housing Bank
Show answer and explanation
Answer: B. Ministry of MSME, Government of India — CGTMSE is an initiative of the Ministry of MSME and SIDBI.
- An RBI savings scheme
- A direct current-account provider
- A credit-guarantee mechanism
- A stock exchange
Show answer and explanation
Answer: C. A credit-guarantee mechanism — Guarantee cover supports eligible loans extended by member lending institutions; the trust is not the ordinary loan disbursing bank.
- Issue sovereign bonds
- Discount accepted trade receivables
- File income tax returns
- Hold company annual general meetings
Show answer and explanation
Answer: B. Discount accepted trade receivables — TReDS finances eligible MSME receivables through participating financiers.
- Always with recourse to the MSME seller
- Without recourse to the MSME seller
- Secured by RBI gold
- Excluded from buyer acceptance
Show answer and explanation
Answer: B. Without recourse to the MSME seller — RBI’s FAQ notes that the relevant TReDS transactions are without recourse to MSME sellers.
- 20
- 25
- 30
- 50
Show answer and explanation
Answer: C. 30 — The official 2025 paper allocated 30 questions and 30 marks to that section.
- GA, MSME, Stream Test and English
- English, Reasoning, Quantitative Aptitude and Computer Knowledge
- Only Quantitative Aptitude and English
- None; all were ranked equally
Show answer and explanation
Answer: B. English, Reasoning, Quantitative Aptitude and Computer Knowledge — The notification separated these four tests from the three merit-section tests.
- 100
- 150
- 180
- 200
Show answer and explanation
Answer: D. 200 — The seven sections together comprised 200 questions carrying 200 marks.
- 50
- 75
- 100
- 125
Show answer and explanation
Answer: B. 75 — Phase-II Paper I was an online descriptive English paper worth 75 marks.
- 100 marks of essay only
- 75-mark objective and 50-mark descriptive components
- 50-mark English and 50-mark computer
- Only a personal interview
Show answer and explanation
Answer: B. 75-mark objective and 50-mark descriptive components — The 125-mark Paper II contained a 75-mark objective and a 50-mark descriptive component.
- One-half of the marks
- One-fourth of the marks assigned to that question
- No deduction
- A flat 2 marks
Show answer and explanation
Answer: B. One-fourth of the marks assigned to that question — The official notice specified a deduction of one-fourth of the marks assigned to an incorrectly answered objective item.
Interactive quiz & study planner
Use the short timed-style drill for recall and the planner for a realistic revision sequence. Your checklist data remains in the current browser; there is no account syncing.
Quick Knowledge Check
Attempt a sample of this page’s MCQ bank. Get instant feedback, a final score and the option to try again.
Build your study roadmap
Your first seven learning milestones
0 of 7 completed
Seven-day quick start
- Day 1 — SIDBI mandate and institutional structure
- Day 2 — Udyam classification and MSME law
- Day 3 — Term lending, working capital, loan processing
- Day 4 — Financial statements and ratios
- Day 5 — NPA, IRAC, guarantees and recovery
- Day 6 — TReDS, NBFC financing and current banking topics
- Day 7 — Revision, MCQs and one descriptive answer
Further reading and exam resources
The links below include official policy sources, the previous recruitment notice, and related CrackTarget notes. Filter them by type or search a topic.
20 resources
SIDBI’s role
Principal financial institution and its mandate
2025 Grade A/B notification PDF
Official 2025 exam scheme and syllabus
SIDBI careers and recruitment
Check current Grade A/B notices
MSME Udyam classification
Investment and turnover limits from April 2025
CGTMSE official website
Credit guarantee fundamentals
RBI TReDS explainer
How MSME invoice discounting works
SIDBI Annual Report 2024–25
Data on MSME finance and bank operations
Indian Financial System
Banking structure and financial institutions
Monetary Policy Study Material
Central bank and monetary transmission
Economic Reforms in India
Financial and structural reforms
Fiscal & Monetary Policy
Policy concepts and application
Economic Development and Planning
Development and policy fundamentals
Poverty and Unemployment
Social and economic issues
Nature & Scope of Management
Management basics
English Grammar Guide
Useful for English writing and Phase I
RBI Quantitative Aptitude
Quantitative practice for screening
Percentages Explained
Banking aptitude percentages
Simple & Compound Interest
Interest calculations
Financial Aptitude and Accounting Books
Optional books and study guides
Full Exam-Wise Study Library
Additional related regulatory topics
No resources match. Try fewer keywords.
SIDBI Grade A & B FAQs
Avoid preparation mistakes caused by old notification dates or applying the General syllabus to specialist streams.
Has a new SIDBI Grade A/B General recruitment notification for 2026 been confirmed?
I could verify the 2025 Grade A/B advertisement, not a new general-cadre 2026 advertisement at the time of this page review. SIDBI also issues other specialist or contractual notices; those should not be treated as Grade A/B General recruitment. Check the current SIDBI careers page directly.
How many vacancies did SIDBI advertise in 2025?
The official 2025 Grade A/B advertisement listed 76 vacancies: 50 Grade A General and 26 Grade B posts (11 General, 8 Legal, 7 IT). These numbers are historical and must not be projected onto a later recruitment cycle.
Which Phase-I sections determined 2025 shortlisting?
The four qualifying subjects were English, Reasoning Aptitude, Quantitative Aptitude and Computer Knowledge. The merit section comprised General Awareness, the 30-mark MSME-related test and the 50-mark stream-specific test, with shortlisting based on merit-section scores after meeting qualifying requirements.
Is the MSME definition based on investment or turnover?
Both. The investment and turnover criteria jointly determine enterprise classification. Revised limits from 1 April 2025 are Micro ₹2.5/₹10 crore; Small ₹25/₹100 crore; and Medium ₹125/₹500 crore for investment/turnover respectively.
Does CGTMSE itself give an MSME a business loan?
It is a credit guarantee mechanism, not normally the direct originator of the underlying business loan. Eligible member lending institutions lend to enterprises and seek cover under the trust’s scheme rules.
Are the questions and essays here actual SIDBI PYQs?
No. All questions and prompts on this redesigned page are original educational practice exercises. They follow syllabus themes without claiming to reproduce an official question paper.
Are the Grade A and Grade B Legal/IT paper requirements identical?
No. The General stream focuses on MSME finance and management, whereas Legal and IT have specialist stream-specific content. Always read the appropriate official syllabus and educational eligibility criteria.
Turn study into exam-ready preparation.
Explore books, free related notes and the regulatory examination community after completing the concept lessons and question bank.
Reviewed 21 October 2026. Exam scheme and 76 vacancy figures refer specifically to SIDBI’s official 2025 Grade A/B notice. MSME classification uses the Government of India’s thresholds effective 1 April 2025. The question bank, essays and numericals are original CrackTarget practice exercises. This independent preparation website is not affiliated with SIDBI. Always confirm eligibility, vacancies and examination dates on SIDBI Careers. Other reference sources: SIDBI About, Udyam, CGTMSE, and RBI TReDS FAQ.
Related CrackTarget resources: Banking Awareness and Financial Inclusion · RBI Grade B Economic and Social Issues