English Test for SBI PO 2018 Prelim Exam – Set 31

Hello Aspirants

State Bank of India (SBI) is going to conduct examination for its recruitment for the post of Probationary Officers (SBI PO 2018) for a total of 2000 vacancies.

Click here to know the details of the Examination

The examination will be held in three phases i.e. Preliminary Examination, Main Examination and Group Exercise & Interview. The Preliminary Exam is scheduled on 1st, 7th & 8th of July 2018. Details of the exam are as under:

Practice the questions so as to familiarize yourself with the pattern of questions to be asked in the exam. 

Directions: Read the passage carefully and answer the following questions.

In May 2013 Gloria James borrowed $200 from Loan Till Payday, a lender near her home in Wilmington, Delaware. Rather than take out a one- or two-month loan for a $100 fee, as she had done several times before, she was offered a one-year loan that would set her back $1,620 in interest, equivalent to an annual rate of 838%. Ms James, a housekeeper making $12 an hour, agreed to the high-interest loan but quickly fell behind on her payments. After filing a lawsuit in federal court, a Delaware judge ruled that the loan in question was not only illegal but “unconscionable”.

Her story is remarkably common. Americans who live pay cheque to pay cheque have few places to turn when they are in financial distress. Many rely on high-interest payday loans to stay afloat. But government efforts to crack down on the $40bn industry may be having an effect.

Roughly 2.5m American households, about one in 50, use payday loans each year, according to government statistics. The typical loan is $350, lasts two weeks, and costs $15 for each $100 borrowed. Although payday loans are marketed as a source of short-term cash to be used in financial emergencies, they are often used to meet chronic budget shortfalls—in 2015 more borrowers in California took out ten payday loans than took out one. Critics say the industry dupes its vulnerable customers into paying high fees and interest rates. And yet surveys show its customers are mostly satisfied, because payday loans are easy and convenient.

Regulation of payday lending in America has historically been the responsibility of states. Over a dozen use interest-rate caps to, in effect, ban payday loans. But lenders can get around these laws by registering as “credit service organisations”, relocating to other states, or even working with Native American tribes to claim sovereign immunity.

At the federal level, Congress passed the Military Lending Act in 2006, capping loan rates to service members at 36%. More recently, the Department of Justice launched “Operation Choke Point”, an effort to press banks into severing ties with businesses at risk of money-laundering, payday lenders among them. But the real crackdown on payday lending could come if the Consumer Finance Protection Bureau (CFPB), a watchdog, implements new regulations on high-interest loans. The rules include underwriting standards and other restrictions designed to keep borrowers out of debt; the CFPB estimates that they could reduce payday-loan volumes by more than 80%.

The threat of regulation may already have had an effect. The Centre for Financial Services Innovation, a non-profit group, reckons that payday-loan volumes have fallen by 18% since 2014; revenues have dropped by 30%. During the first nine months of 2016, lenders shut more than 500 stores and total employment in the industry fell by 3,600, or 3.5%. To avoid the new rules, lenders are shifting away from lump-sum payday loans toward instalment loans, which give borrowers more time to get back on their feet.

It would be premature to celebrate the demise of payday lenders. The Trump administration is likely to block the CFPB’s new regulations. And even if the rules are pushed through, consumers may not be better off. Academic research on payday-lending regulation is mixed, with some studies showing benefits, others showing costs, and still others finding no consumer-welfare effects at all. A forthcoming paper by two economists at West Point concludes that the Military Lending Act yielded “no significant benefits to service members”.

1. What, according to the passage, are the CRPB’s new regulations?
   i. underwriting standards
   ii. crackdown on payday lending
   iii. trying to keep borrowers out of debt
   Only i & ii
   Only ii & iii
   Only i & iii
   Only ii
   All are Correct
   Option C
   Last para

    

2. What are the effects of the CRPB’s new regulations?
   i. payday-loan volumes have fallen by 18%
   ii. revenues have dropped by 30%
   iii. employment in the industry fell by 3.6%
   Only i & ii
   Only ii & iii
   Only iii & i
   Only ii
   All are Correct
   Option A
   

    

3. What, according to the passage, is false about Military Lending Act in 2006?
   pressing banks into severing ties with businesses at risk of money-laundering
   to keep borrowers out of debt
   capping loan rates to service members at 36%
   the Department of Justice launched “Operation Choke Point”
   None of these
   Option B
   

    

4. What, according to the passage, is the synonym of “dupes “:
   cognizant
   hoax
   aprehensive
   informed
   sentient
   Option B
   

    

5. What, according to the passage, is true about Regulation of Payday lending ?
   i. lenders can relocate to other states
   ii. the responsibility of states
   iii. lenders can do away with these laws
   Only i & ii
   Only ii & iii
   Only iii & i
   Only iii
   All are Correct
   Option A
   

    

6. What, according to the passage, is the synonym of “unconscionable”:
   sagacious
   prudent
   preposterous
   jerky
   All are Correct
   Option C
   

    

7. Who, according to the passage, is Ms James?
   a housekeeper making $12 an hour
   who borrowed $200 from Loan Till Payday
   was offered a two-week loan that would set her back $1,620 in interest
   All except c
   None of these.
   Option D
   

    

8. What, according to the passage, is the meaning of “Financial Distress”?
   the failure or refusal of the government of a sovereign state to pay back its debt in full
   receiving a preferential right to payment upon the debtor’s bankruptcy under applicable insolvency laws
   a floating charge entered into shortly prior to the company going into liquidation which is void or unenforceable
   promises to creditors of a company are broken or honored with difficulty
   All of these
   Option D
   

    

9. What is the tone of the passage?
   Vitrolic
   Indignant
   Euphemistic
   Grandiose
   All are Correct
   Option C
   

    

10. What is the most suitable title of the passage?
    Payday lending
    Consumer Loans
    Regulations in demand
    Both a & b
    None of these
    Option B