English Test for IBPS PO Prelims Exam set – 17

Directions (1-5): Read the passage and answer the questions that follow:

If the financial performance of India’s largest lender is anything to go by, an end to the severe bad loans crisis may be much farther beyond the horizon than previously anticipated. For the first time in almost 19 years, the State Bank of India reported a quarterly loss of Rs 2,416 crore for the three months ended December, compared with a net profit of Rs 2,610 crore in the year-earlier period. While the figures are not strictly comparable after SBI completed merger with its associates, the loss was the result of both a massive increase in provisions to account for bad loans and a substantial amount of mark-to-market losses on its holding of government bonds. Provisions for non-performing assets (NPAs) more than doubled to about Rs 17,760 crore, from about Rs 7,200 crore in the third quarter of 2016-17. On treasury operations, SBI recorded a loss of about Rs 3,255 crore, versus a profit of about Rs 4,776 crore in the comparable period. The bank revealed that an audit by the Reserve Bank of India showed a divergence of Rs 23,239 crore in the way it classified assets at the end of the last financial year, which led to increase in provisions in the last quarter. Most of these reclassified assets are linked to troubled projects in sectors including power and telecom. SBI, of course, is not the only lender to have had its assets forcibly reclassified by the RBI. Private sector lenders have also been found guilty of pushing troubled assets under the carpet until the RBI called their bluff.

According to a joint study by Assocham and Crisil, gross NPAs in the banking system are estimated to increase to Rs 9.5 lakh crore by March 2018, from Rs 8 lakh crore a year earlier. In that case, write-offs recognising losses may be the most honest and practical way to deal with the bad loans problem. So the RBI in the coming months should continue to push banks, both public and private, to promptly recognise the stressed loans on their portfolios. Incidentally, Prime Minister Narendra Modi last week laid the blame for bad loans on the previous government. While it is quite true that the present bad loans crisis has been a long time in the making, the problem of lax corporate governance, which has plagued public sector banks and contributed in no small measure to the present crisis, still remains largely unaddressed by the government. Even the latest plan to recapitalise public sector banks may achieve little more than giving some temporary relief to lenders for the sake of reviving credit growth. The bad loans problem is likely to remain a festering sore and risks undermining the health of the economy until meaningful structural reforms to the banking system are undertaken.

  1. Which of the following is/are true as per the passage?

    I. According to a joint study by Assocham and Crisil, gross NPAs in the banking system are estimated to increase to Rs 9.5 lakh crore by March 2018, from Rs 8 lakh crore in 2017.

    II. SBI is the only lender to have had its assets forcibly reclassified by the RBI.

    III. In terms of provisioning, SBI recorded a loss of about Rs 3,255 crore in 2018, versus a profit of about Rs 4,776 crore in the comparable period.

    Only II
    Only I
    Only I and III
    Only II and III
    None of the above
    Option B
    Refer to:
    ‘According to a joint study by Assocham and Crisil, gross NPAs in the banking system are estimated to increase to Rs 9.5 lakh crore by March 2018, from Rs 8 lakh crore a year earlier.’
    ‘SBI, of course, is not the only lender to have had its assets forcibly reclassified by the RBI.’
    ‘On treasury operations, SBI recorded a loss of about Rs 3,255 crore, versus a profit of about Rs 4,776 crore in the comparable period.’

     

  2. As per the passage, what can be some possible steps taken to rectify the situation of bad loans meaningfully?

    I. Banks should honestly recognize stressed loans in their respective portfolios.

    II. Address corporate governance issues plaguing the banking sector.

    III. Earmark more money for bank recapitalization.

    Only III
    Only I
    Only I and II
    Only II and III
    All of the above
    Option C
    Refer to: ‘RBI in the coming months should continue to push banks, both public and private, to promptly recognise the stressed loans on their portfolios. Incidentally, Prime Minister Narendra Modi last week laid the blame for bad loans on the previous government. While it is quite true that the present bad loans crisis has been a long time in the making, the problem of lax corporate governance, which has plagued public sector banks and contributed in no small measure to the present crisis, still remains largely unaddressed by the government. Even the latest plan to recapitalise public sector banks may achieve little more than giving some temporary relief to lenders for the sake of reviving credit growth.’

     

  3. What was the most important reason for such a huge increase in provisioning by SBI for the last quarter?
    An audit by the RBI showed SBI had erroneously classified a huge amount of assets and had had to reclassify the same in the last quarter.
    RBI has made it mandatory for lenders to compulsorily refer a proportion of NPAs to the NCLT for arbitration.
    A sudden increase in bad loans in the infrastructure sector.
    RBI has implemented a new regime wherein all the bad loans have to be recognized in 180 days and arbitration to be started on the same, failing which lenders would be penalized.
    None of the above
    Option A
    Refer to: ‘The bank revealed that an audit by the Reserve Bank of India showed a divergence of Rs 23,239 crore in the way it classified assets at the end of the last financial year, which led to increase in provisions in the last quarter. Most of these reclassified assets are linked to troubled projects in sectors including power and telecom.’

     

  4. What were the reasons for SBI suffering such huge losses in the previous quarter?

    I. Increase in provisioning as part of accounting for bad loans.

    II. Mark to market losses on government bonds

    III. Mark to market losses on corporate debt securities.

    Only II
    Only I and II
    Only II and III
    Only I and III
    All of the above
    Option B
    Refer to: ‘While the figures are not strictly comparable after SBI completed merger with its associates, the loss was the result of both a massive increase in provisions to account for bad loans and a substantial amount of mark-to-market losses on its holding of government bonds.’

     

  5. Why is it said that an end to the severe bad loans crisis may be much farther beyond the horizon than previously anticipated?
    Due to the RBI withdrawing all previous restructuring schemes for resolution.
    Because RBI ordered an Asset Quality Review for all the banks in order to account for all NPAs.
    Because the nation’s largest lender reported a huge loss for the last quarter results vis-à-vis profits before.
    Because SBI forms a very small proportion of the gross NPAs prevailing in the Banking Industry.
    None of the above
    Option C
    Refer to: ‘If the financial performance of India’s largest lender is anything to go by, an end to the severe bad loans crisis may be much farther beyond the horizon than previously anticipated. For the first time in almost 19 years, the State Bank of India reported a quarterly loss of Rs 2,416 crore for the three months ended December, compared with a net profit of Rs 2,610 crore in the year-earlier period.’

     

  6. Directions(6-10): The following question has two blanks, each blank indicating that something has been omitted. Choose the set of words for each blank that best fits in the context of the sentence.

  7. The edtech firms provide campus recruits the required platform, content, assignments and project work in their last _____________ of college to ensure they are prepared with programming skills and _____________ digital skills before they join.
    week, archaic
    semester, emerging
    month, irrational
    segment, depreciating
    portion, appreciating
    Option B

     

  8. Content that _____________ leaders or groups of the opposite ideology based on falsehoods, deepens communal _____________ or incites hatred have gained traction in the last few years.
    disparages, harmony
    denigrates, polarization
    denigrates, harmony
    maligns, congruence
    excites, agenda
    Option B
    denigrate- criticize unfairly; disparage, malign.

     

  9. IFC aims to support the Maharashtra Housing department to scale-up green affordable _____________ in the region and avoid lock-in of the resources and energy _____________ housing units.
    homes, extensive
    spots, filling
    companies, neutral
    markets, finishing
    housing, intensive
    Option E

     

  10. To deal with the slowdown, we are focusing on driving volume growth through new product _____________ and consumer offers, as well as fast-tracking growth in _____________ channels such as modern trade and e-commerce.
    unveilings, elusive
    eliminations, various
    launches, alternate
    inaugurations, ambiguous
    negligence, variable
    Option C

     

  11. The minister’s _____________ would have inspired greater confidence had India taken its own rules on waste management _____________ .
    claim, seriously
    concern, smoothly
    epilogue, generously
    words, vaguely
    ego, boldly
    Option A
    Vaguely- in a way that is uncertain, indefinite or unclear

     

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