Read the following passage carefully and answer the questions given after it.
Every year, a bank manager in a district such as Vidarbha watches the sky almost as anxiously as the farmers she lends to. A weak or erratic monsoon does not merely reduce harvests; it ripples through the loan book. Crop loans fall overdue, tractor instalments are missed, and the small shops that depend on rural spending see their sales dip. For lenders with a large share of agricultural credit, climate is no longer a distant environmental concern but a balance-sheet risk.
Traditionally, banks have dealt with this risk after the event. When a district is declared drought-hit, loans are restructured, repayment is rescheduled and fresh credit is extended for the next season. This approach keeps farmers afloat, but it treats each bad year as an exception. With extreme weather becoming more frequent, the exception is starting to look like the rule, and repeated restructuring can leave a borrower carrying debts that grow faster than his income.
A newer approach tries to price climate risk before the loan is made. Lenders combine satellite images, rainfall records and soil data to estimate how vulnerable a particular field is. In theory this allows them to offer cheaper credit to farmers who adopt drip irrigation or drought-resistant seeds, and to pair loans with insurance that pays out automatically when rainfall falls below a threshold. Such parametric insurance avoids the long delays of crop-cutting surveys, though it can be unfair to a farmer whose crop fails even when the nearest rain gauge records normal rainfall.
The danger is that better measurement may lead banks simply to avoid the riskiest districts altogether. That would push the most vulnerable farmers back towards moneylenders at precisely the moment they need formal credit most. Regulators therefore face a delicate task: encouraging banks to understand climate risk without allowing them to use that understanding as a reason to withdraw.
Q1.Why, according to the passage, does a weak monsoon worry a rural bank manager?
- It increases the number of new account holders
- It makes satellite data unavailable
- It forces the bank to close its rural branches
- It leads to overdue loans and lower rural spending, which hurt the bank's loan book
- It raises the interest rates set by the central bank
Q2.What is the main weakness of the traditional way of handling drought, as described in the passage?
- It requires satellite images that banks cannot afford
- It depends entirely on private insurance companies
- It treats every bad year as an exception, and repeated restructuring can make debts grow faster than income
- It is applied only to large farmers
- It refuses fresh credit to farmers after a drought
Q3.Which of the following is mentioned as a possible benefit of pricing climate risk before lending?
- Guaranteed loan waivers in every drought year
- An end to all crop insurance
- Higher minimum support prices for crops
- Cheaper credit for farmers who adopt drip irrigation or drought-resistant seeds
- Free tractors for small farmers