IBPS Reading Comprehension 2

Question 1

A passage states: 'The government launched a financial inclusion scheme to bring unbanked populations into the formal banking system. Despite initial enthusiasm, rural adoption remained sluggish due to inadequate infrastructure and low digital literacy.' What is the primary obstacle to the scheme's success according to the passage?

Accepted Answer

Poor infrastructure and low digital literacy

Answer

The passage explicitly states that inadequate infrastructure and low digital literacy caused sluggish rural adoption.

Question 2

Read: 'Microfinance institutions bridge the gap between formal banks and underserved communities by offering small loans without requiring collateral. However, critics argue that high interest rates charged by some MFIs negate the benefits for borrowers.' Which of the following best summarizes the author's view?

Accepted Answer

Microfinance has merits but faces criticism over interest rates

Answer

The passage presents microfinance's benefit (no collateral) alongside a criticism (high interest rates), reflecting a balanced view.

Question 3

Passage: 'Basel III norms require banks to maintain higher capital buffers to absorb losses during financial stress. While this strengthens bank resilience, it may reduce banks' capacity to extend credit, potentially slowing economic growth.' The word 'resilience' most nearly means:

Accepted Answer

Ability to recover from setbacks

Answer

Resilience refers to the ability of banks to withstand and recover from financial stress or losses.

Question 4

A passage reads: 'The RBI periodically conducts open market operations by buying or selling government securities to regulate liquidity in the banking system. When the central bank buys securities, it injects liquidity; when it sells, liquidity is absorbed.' What happens to liquidity when RBI sells government securities?

Accepted Answer

Liquidity is absorbed

Answer

The passage explicitly states that when the central bank sells securities, liquidity is absorbed from the system.

Question 5

Passage excerpt: 'Non-performing assets have emerged as a significant challenge for Indian public sector banks, eroding profitability and constraining fresh lending. Prompt corrective action frameworks have been deployed to rehabilitate stressed banks.' What is the effect of NPAs on banks according to the passage?

Accepted Answer

They erode profitability and limit new lending

Answer

The passage directly links NPAs to eroding profitability and constraining fresh lending in public sector banks.

IBPS - Institute of Banking Personnel Selection Practice Test

IBPS - Institute of Banking Personnel Selection Practice Test

IBPS Reading Comprehension 2