IBPS Reading Comprehension Passages 2 — Questions and Answers
Question 1: 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?
- The decline of digital banking in India
- The coexistence of digital growth and cash reliance in rural areas (Correct answer)
- The failure of government financial inclusion schemes
- The superiority of cash over digital payments
Correct 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.
Question 2: 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:
- Accelerating
- Suppressing (Correct answer)
- Redirecting
- Evaluating
Correct answer: Suppressing
'Stifling' means suppressing or suffocating, indicating that NPAs hinder economic expansion.
Question 3: 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?
- It makes borrowing cheaper for consumers
- It is intended to boost consumer spending
- It is used as a tool to control inflation (Correct answer)
- It increases the money supply in the economy
Correct 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.
Question 4: 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?
- History of Indian Banking Reforms
- Beyond Account Opening: The True Meaning of Financial Inclusion (Correct answer)
- Digital Wallets and Financial Literacy
- RBI's Monetary Policy Objectives
Correct 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.
Question 5: 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?
- Immediate
- Drawn out over a long period (Correct answer)
- Legally complex
- Financially rewarding
Correct answer: Drawn out over a long period
'Protracted' means prolonged or extended over a long duration, describing the slow nature of legal recovery.
Question 6: 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?
- Wholly critical of MFIs
- Entirely supportive of MFI expansion
- Balanced, acknowledging both benefits and risks of MFIs (Correct answer)
- Indifferent to the role of MFIs
Correct 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.
Question 7: 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?
- To maximise bank profits
- To fund government infrastructure projects
- To direct credit toward underserved sectors of the economy (Correct answer)
- To regulate foreign exchange reserves
Correct 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.
IBPS Reading Comprehension Passages 2
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?