Reading Comprehension Passages Flashcards

A passage states: 'Despite a surge in digital transactions, cash remains the preferred mode of payment in rural India, owing to limited internet penetration and financial literacy gaps.' What does the passage primarily highlight?

Answer: The coexistence of digital growth and cash reliance in rural areas

The passage contrasts digital transaction growth with persistent cash preference in rural areas due to infrastructure and literacy gaps.

A banking passage reads: 'Non-performing assets (NPAs) erode a bank's profitability and restrict its ability to extend fresh credit, thereby stifling economic growth.' The word 'stifling' most nearly means:

Answer: Suppressing

'Stifling' means suppressing or suffocating, indicating that NPAs hinder economic expansion.

Passage: 'The RBI's repo rate decisions influence borrowing costs across the economy. A rate cut typically encourages credit offtake, while a rate hike aims to contain inflationary pressures.' What can be inferred about a rate hike?

Answer: It is used as a tool to control inflation

The passage explicitly states that a rate hike aims to contain inflationary pressures, implying it is an anti-inflation tool.

A passage says: 'Financial inclusion entails not merely opening bank accounts but ensuring their active usage through regular deposits, withdrawals, and access to credit.' Which title best suits this passage?

Answer: Beyond Account Opening: The True Meaning of Financial Inclusion

The passage argues that financial inclusion goes beyond account creation to meaningful, active usage of banking services.

Passage: 'Wilful defaulters—borrowers who can repay but choose not to—pose a grave challenge to the banking system, as recovery through legal channels is protracted and uncertain.' What does 'protracted' mean?

Answer: Drawn out over a long period

'Protracted' means prolonged or extended over a long duration, describing the slow nature of legal recovery.

A passage reads: 'Microfinance institutions (MFIs) bridge the credit gap for low-income borrowers excluded from formal banking channels. However, aggressive lending without adequate borrower assessment has led to over-indebtedness in some regions.' What is the author's tone?

Answer: Balanced, acknowledging both benefits and risks of MFIs

The author acknowledges the positive role of MFIs while also flagging the risk of over-indebtedness from irresponsible lending.

Passage: 'Priority sector lending (PSL) norms mandate that banks allocate a specified portion of their credit to sectors like agriculture, MSMEs, and affordable housing to ensure equitable credit distribution.' What is the PURPOSE of PSL norms as described?

Answer: To direct credit toward underserved sectors of the economy

PSL norms ensure that banks channel credit to priority sectors such as agriculture and MSMEs for equitable distribution.