SBI PO Prelims Full Mock Test 05

1. Read the following passage carefully and answer the questions given after it. Over the past decade, India has built a remarkable set of digital rails. Payments that once needed a cheque book and a visit to a branch now take a few seconds on a phone, and a borrower's bank statements can be shared with a lender, with consent, in minutes. These rails have lowered the cost of serving a small customer so sharply that lenders who once ignored street vendors and home-based workers now compete for them. Yet the very speed that makes digital credit attractive has also exposed its weakest point: trust. A loan that can be approved in ten minutes can also be pushed on someone who does not need it, priced in ways the borrower does not understand, and recovered with methods that would never be tolerated at a bank counter. In the early years of app-based lending, complaints about hidden charges, aggressive recovery calls and the misuse of contact lists on borrowers' phones were common. The problem was not technology itself but the absence of rules that matched its pace. Regulation, which moves by consultation and circular, was chasing a market that changed every quarter. The response has been to shift attention from the app to the arrangement behind it. Regulators have insisted that the money must flow directly between the regulated lender and the borrower, that the full cost of a loan be disclosed upfront as a single annual figure, and that borrowers get a cooling-off period in which they can exit without penalty. These measures do not slow down good lenders; they make bad behaviour expensive. Still, rules alone cannot manufacture trust. A first-time borrower in a small town judges a lender less by its licence than by how it treats her when she misses an instalment because a crop failed or a child fell ill. Lenders that build flexible repayment into their products, explain terms in the borrower's own language and resolve complaints quickly are likely to keep customers for years. Those that treat digital reach as a licence to churn will find that a bad review travels faster than any advertisement. The next phase of financial inclusion, therefore, will be measured less by the number of accounts opened or loans disbursed than by how many borrowers come back voluntarily. Speed brought people in; fairness will decide whether they stay.

   Q1.Which of the following best expresses the central idea of the passage?

   • A.Digital lending should be replaced by branch banking because apps cannot be regulated.
   • B.Digital lending has widened access to credit, but its lasting success depends on fair conduct that earns borrowers' trust.
   • C.Small-town borrowers prefer advertisements to personal service.
   • D.Regulators have completely solved the problems of app-based lending.
   • E.Speed is the only factor that matters in financial inclusion.

2. Q2.According to the passage, what was the root cause of the problems seen in the early years of app-based lending?

   • A.The technology used by lenders was fundamentally faulty.
   • B.Banks refused to share data with app-based lenders.
   • C.Borrowers deliberately refused to repay their loans.
   • D.Rules did not keep pace with a fast-changing market.
   • E.Interest rates were fixed too low by regulators.

3. Q3.Which of the following measures is/are mentioned in the passage as steps insisted upon by regulators? I. Loan money must flow directly between the regulated lender and the borrower. II. A ceiling on the interest rate that digital lenders may charge. III. A cooling-off period during which the borrower can exit without penalty.

   • A.Only I and III
   • B.Only I
   • C.Only II
   • D.Only II and III
   • E.All I, II and III

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