IBPS PO Reading Comprehension Mock Test 02

1. The recent surge in non-performing assets (NPAs) within public sector banks has sparked a debate on the efficacy of the Insolvency and Bankruptcy Code (IBC). While the IBC was designed to provide a time-bound resolution process, empirical evidence suggests a growing backlog of cases, diluting its primary objective. Haircuts taken by banks have also been alarmingly steep in several high-profile corporate defaults, raising questions about the actual recovery rates compared to the initial projections. Furthermore, the role of the National Company Law Tribunal (NCLT) has been scrutinized for procedural delays. Critics argue that unless structural reforms are implemented to expedite judicial proceedings, the mounting stress on banking balance sheets will inevitably choke credit growth, thereby impeding broader macroeconomic recovery.

   Q1.What is the central theme of the passage?

   • A.The success of the National Company Law Tribunal in resolving corporate defaults.
   • B.The structural reforms needed to accelerate credit growth in public sector banks.
   • C.The challenges and shortcomings of the Insolvency and Bankruptcy Code in resolving non-performing assets.
   • D.The historical evolution of banking regulations in the Indian macroeconomic landscape.
   • E.The necessity of increasing the haircuts taken by banks to ensure faster resolution.

2. Q2.According to the passage, what is the consequence of procedural delays by the NCLT?

   • A.An immediate reduction in the number of corporate defaults.
   • B.A decrease in the haircuts taken by public sector banks.
   • C.Mounting stress on banking balance sheets leading to choked credit growth.
   • D.A rapid acceleration in broader macroeconomic recovery.
   • E.The immediate dissolution of the Insolvency and Bankruptcy Code.

3. Q3.What does the term 'haircuts' most likely refer to in the context of the passage?

   • A.The administrative fees charged by the NCLT for processing bankruptcy cases.
   • B.The reduction in the value of an asset or the loss taken by banks on the outstanding loan amount.
   • C.The structural reforms implemented by the government to aid public sector banks.
   • D.The time taken by the judicial proceedings to resolve corporate defaults.
   • E.The interest rate applied to new loans after a corporate default.

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