CAIIB · Banking Regulations & Business Laws · Module C — Important Acts/Laws & Legal Aspects of Banking Operations, Part B
CAIIB BRBL Unit 16 — The Micro, Small and Medium Enterprises Development Act, 2006: Free MCQs with Explanations
By Swarnakshi Jha (ex-banker) · Updated 29 October 2026 · Paper IV of the December 2026 cycle (Sunday 20 December 2026)
This is the free practice page for CAIIB BRBL Unit 16 — The Micro, Small and Medium Enterprises Development Act, 2006 (Module C — Important Acts/Laws & Legal Aspects of Banking Operations, Part B). The CAIIB Mock Centre holds 179 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five practice questions with explanations, and the traps that cost marks.
BRBL · Module C179 MCQs in the Mock Centre5 free belowPaper on 20 December
Key facts examiners test from this unit
Objects, structure and classification — the MSMED Act (from 2 October 2006) defines MSMEs by investment and turnover and protects micro and small suppliers against late payment.
Definitions — acceptance (actual or deemed) starts the clock; the appointed day is the day after 15 days; only a registered micro or small supplier is protected.
The Board and the Advisory Committee — the National Board reviews and recommends; the Advisory Committee advises on classification and Chapter IV; Chapter IV supports MSMEs with programmes, credit, procurement and Funds.
Changed since the textbook
Classification limits raised (1 April 2025). S.O. 1364(E) of 21 March 2025: micro ₹2.5 crore/₹10 crore, small ₹25 crore/₹100 crore, medium ₹125 crore/₹500 crore. Source: RBI FAQ
Section 43B(h) of the Income-tax Act (1 April 2024). Finance Act, 2023 (from AY 2024-25, i.e. FY 2023-24): a sum due to a micro or small enterprise and paid after the Section 15 limit is deductible only when paid. Source: TaxGuru
5 free practice questions — tap an option
Five practice questions from this unit. Answers lock on the first tap, exactly as in the exam, and an explanation opens underneath. The Mock Centre has all 179 questions on this unit, from easy to tough, with caselets and key-in numericals, why every other option is wrong and the exam tip — and tracks your score and revision dates.
Question 1 of 5
What does 'Small Industries Bank' mean in the Act?
Why (c): The Small Industries Bank is SIDBI, established under the SIDBI Act, 1989. (a) is wrong: NHB is the housing bank. (b) is wrong: MUDRA is not the defined bank. (d) is wrong: IDBI is not the defined bank.
Question 2 of 5
What share of annual procurement must Central Ministries and CPSEs buy from MSEs?
Why (c): The Public Procurement Policy for MSEs requires at least 25% of annual procurement from micro and small enterprises. (a) is wrong: Medium enterprises are not in the target. (b) is wrong: The target is 25%. (d) is wrong: The target is 25%.
Question 3 of 5
Within the 25% target, what share must come from women-owned MSEs?
Why (d): Within the 25% target, 3% must come from women-owned MSEs (4% from SC/ST-owned). (a) is wrong: The share is 3%. (b) is wrong: 4% is the SC/ST sub-target. (c) is wrong: The share is 3%.
Question 4 of 5
From when is the 45-day ceiling on the agreed payment period under Section 15 of the MSMED Act counted?
Why (c): Section 15 requires the buyer to pay by the agreed date, which cannot be more than 45 days from the day of acceptance or deemed acceptance. The invoice, order and dispatch dates do not start the clock. (a) is wrong: The invoice date does not start the clock. (b) is wrong: The order date does not start the clock. (d) is wrong: Dispatch is not acceptance.
Question 5 of 5
Which Council has jurisdiction over a dispute?
Why (a): Section 18(4): the Council of the supplier's location acts against a buyer anywhere in India. (b) is wrong: The buyer's location does not decide. (c) is wrong: Delhi has no special role. (d) is wrong: Jurisdiction is fixed by the supplier's location.
0 of 5 answered.
Traps in this unit
The 2020 table is out of date from 1 April 2025.
Services are protected though they are not 'goods'.
A vacancy does not invalidate the Board's acts.
Practise all 179 questions on Unit 16. The free CAIIB demo opens Units 1–2 of every paper with full explanations; the BRBL Online Mock Centre unlocks all 5,800+ BRBL questions, the full-length papers with caselets and key-ins, module mocks and Smart Revision for 18 months (₹1,499).
Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. CAIIB content follows rules and developments up to IIBF's cut-off of 30 June 2026 (where a rule changed later, the update box says so); verify from official sources before relying on them in practice.