Prelims 2026 · Q97
Capital markets, insurance & financial instruments X-Ray · Core #6 Easy Provisional keyWhich of the following statements about Crowdfunding is/are correct?
- 1.Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project.
- 2.Small and Medium Enterprises (SMEs) are able to raise funds at lower cost of capital without undergoing rigorous procedures.
Select the answer using the code given below:
Answer & explanation
Answer: (c) Both 1 and 2
Both statements follow SEBI’s consultation paper on crowdfunding. It defines crowdfunding as soliciting small amounts from many investors through a web platform, and lists among its benefits that SMEs can raise funds at lower cost of capital without rigorous procedures.
- ✓ 1. SEBI’s paper defines crowdfunding as solicitation of small amounts of funds from multiple investors through a web-based platform or social networking site for a specific project, business venture or social cause.
- ✓ 2. SEBI lists this as a benefit of crowdfunding for SMEs: lower cost of capital without going through rigorous procedures.
Remember · Crowdfunding: small sums from many investors via a web platform; SEBI’s 2014 consultation paper notes it as an alternative funding route for start-ups and SMEs.
Sources
- SEBI: Consultation Paper on Crowdfunding in India (June 2014), definition ↗ “Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project, business venture or social cause. … SMEs are able to raise funds at lower cost of capital without undergoing through rigorous procedures in this mode.”
Question and answer: UPSC's provisional GS Paper I (2026, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·