SBI PO Mains English Sectional Mock Test 05

1. Read the following passage carefully and answer the questions given after it. Every year, banks in India gather more deposits than the year before. Salaries land in accounts, shopkeepers sweep in their takings, and parents put money aside for school fees. Yet the owner of a small workshop who asks for a loan to buy a second machine is told to wait, to bring more papers, or to come back next quarter. The money is there; the lending is not. This gap between deposits and small-business credit is one of the quiet puzzles of Indian banking. Part of the answer lies in how banks judge risk. A large-company loan comes with audited accounts, a credit rating and collateral that can be valued in a day. A workshop loan usually comes with none of these. Its sales live in notebooks, its orders arrive by phone, and its owner may never have filed a tax return. For a loan officer, the small loan can take as much work as a loan fifty times its size. When the cost of checking is high and the return is low, caution wins. Banks therefore park much of their money where checking costs almost nothing: government securities. They are safe, can be sold at short notice, and need little paperwork. The result is a system that is strong on safety and weak on reach. He borrows from a supplier at a higher price, delays paying his workers, or turns to a local moneylender who charges far more than any bank. Credit still flows, but through the dearest channels, and every extra rupee of interest comes out of wages, repairs and the second machine that is never bought. The task is to lower the cost of knowing a small borrower, using bank statements, digital payment records and GST filings that show the scale of a business. Where such records exist, lending decisions can be quicker and fairer. The deposits are already in the bank; the question is whether it can learn enough, cheaply enough, to send them back to the streets where they were earned.

   Q1.According to the passage, what is the 'quiet puzzle' described in the first paragraph?

   • A.Workshop owners refuse to take loans from banks.
   • B.Banks lend too freely to small workshops.
   • C.Parents save too little for school fees.
   • D.Deposits grow every year, yet small firms struggle to borrow.
   • E.Banks collect too few deposits to meet the demand for loans.

2. Q2.Why does a small loan take as much work as a much larger one, according to paragraph 2?

   • A.Small firms borrow only in cash, leaving no record at all.
   • B.Loan officers dislike lending to small firms.
   • C.Small loans are legally barred from being checked quickly.
   • D.Rating agencies refuse to rate small workshops.
   • E.The borrower usually has no audited accounts, credit rating or easily valued collateral, so the bank must do the checking itself.

3. Q3.According to paragraph 2, what makes lending to a large company easier for a bank?

   • A.Audited accounts, a credit rating and collateral that can be valued quickly.
   • B.A lower rate of interest than small firms pay.
   • C.A personal guarantee from the company's owner.
   • D.A government promise to repay the loan in full.
   • E.The absence of any paperwork at all.

Start the test to answer these. Correct answers and explanations are shown after you submit.