SBI PO Prelims Full Mock Test 12

1. Read the following passage carefully and answer the questions given after it. Small and medium enterprises are often described as the backbone of the Indian economy, yet many of them struggle to obtain bank credit. The reason is rarely a lack of business. A garment unit may have regular orders from large buyers, but if it has no land or building to offer as collateral and keeps few formal records, a bank finds it hard to judge whether a loan will be repaid. The firm then turns to informal lenders, whose rates can be several times higher. Two changes are slowly altering this picture. The first is the spread of digital records. When a firm files goods and services tax returns, receives payments through digital channels and issues electronic invoices, it leaves a trail of data that lenders can analyse. A bank can see how much the firm sells each month, how quickly its customers pay and whether its business is growing, without relying only on property papers. The second change is the rise of invoice financing platforms. A small supplier that has delivered goods to a large company usually waits sixty or ninety days to be paid. On these platforms, the supplier can upload the approved invoice and receive most of the money within days from a financier, who is later repaid by the large buyer. Because the risk rests largely on the buyer, who is usually more creditworthy, the cost of finance falls. These tools are not a cure-all. Many tiny firms are still outside the formal tax system, and data can be misread or misused. But by allowing lenders to judge a business by its cash flows rather than its assets, they promise to bring credit within reach of thousands of enterprises that were previously turned away.

   Q1.According to the passage, why do many small and medium enterprises find it hard to get bank credit?

   • A.They often lack collateral and formal records that help banks judge repayment.
   • B.Banks are not allowed to lend to them.
   • C.They usually have no regular customers.
   • D.They prefer not to borrow at all.
   • E.Their owners lack education.

2. Q2.What happens when such firms are unable to obtain bank loans?

   • A.They close down immediately.
   • B.They sell their goods abroad.
   • C.They receive free grants from the government.
   • D.They stop taking new orders.
   • E.They borrow from informal lenders at much higher rates.

3. Q3.How do digital records help lenders, according to the passage?

   • A.They replace the need for any loan application.
   • B.They guarantee that every loan will be repaid.
   • C.They show sales, payment patterns and growth without relying only on property papers.
   • D.They reduce the tax paid by firms.
   • E.They allow banks to seize property quickly.

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