Directions (1-6): Read the following passage carefully and answer the questions given below it. Certain words have been printed in bold to help you to locate them while answering some of the questions.
- Giving loans to impoverished women to make ceramics or to farmers to buy milk cows were not seen as great business. Microfinance was an industry championed by antipoverty activists. Today it is on the verge of a revolution, with billions of dollars from big banks, private-equity shops and pension funds Pouring in, driving growth of 30% to 40% this year alone. In 1998, a nonprofit microfinance organization in Peru, converted into a bank (called Mibanco). This demonstrated that the poor are good risks who repay loans on time and getting them together, not only chips away at poverty but also turns a profit. The success of Mibanco has piqued the interest of commercial banks, which had previously shunned the country’s poor. Now big banks are going alter Mibanco’s clients with low-rate loans and realising it takes special know-bow to work with the unbanked-are hiring away Mibanco’s staff.
But with the emergence of players who are only out for profit, microfinance schemes could end up milking the poor. This could happen in countries where lenders don’t have to disclose interest rates. When a Mexican microfinance went public, revealing its loans had rates of about 86% annually, the Consultative Group to Assist the Poor (CGAP) criticised it for putting shareholders ahead of clients. The pressure to turn a profit also forces microfinance to change their business models in ways that depart from the Industry’s core mission: to help poor people 1ead better lives. Such shifts have caw the average loan size to triple. Moreover smaller loans being costlier to service, a lower percentage of loans go to women because they tend to take out smaller sums. According to CGAP, with the flood of new large entities there is the risk that a large percentage of cross-border funds go to Latin America and Eastern Europe, the world’s most developed microfinance markets. “The poorest of the world’s poor, who are predominantly Lu Asia and Africa get left out,’ says the CEO of the nonprofit Grameen Foundation, which helps, develop microfinance institutions.
Segmenting the industry, might be worthwhile if it allows more of the poor to get access to credit. Multinational corporations could take the top microfinance institutions to the next level, and the remainder could be the responsibility of development groups and regional banks. Yet making loans to poor people is hardly a poverty cure. Property rights and the rule of law matter too. One cannot overidealize what microfinance alone can do. Most nonprofits started with lending simply because local laws prohibited nonbanks from offering deposit accounts. With an increase in competition and marketing efforts, Poverty-alleviation experts are concerned that people will be talked into loans they wouldn’t otherwise want. For example, organisations like Mibanco are providing consumer loans. There is nothing wrong with buying Tvs and microwaves on credit, but certain markets, like Mexico, have been flooded with loans that have nothing to do with providing capital to aspiring entrepreneurs- just increasing household debt.
1. Why did most microfinance institutions initially provide only credit services?Because they were unable to compete with the interest rates offered on deposits by banks.Because they have to operate purely on a nonprofit basis.Government restrictions prevented them from offering additional services.To ensure the poor have access to modern necessities like microwaves.None of the aboveOption C
Most microfinance institutions initially provide only credit services because local laws prohibited nonbanks from offering deposit accounts.
- What was the impact of the non-disclosure of the interest rates by lending institutions?
I. The Government issued sanctions against such firms
II. Shareholders’ interests were not protected
III. Mare micro finance institutions were motivated to go public
IV. The poor were exploitedOnly IBoth II and IIIBoth III and IVOnly IVNone of the aboveOption D
- Which of the following is/are the challenge/s faced by Mibanco at present from big banks?
(A)Ensuring loyalty of their customers.
(B) Retention of employees.
(C) Maintaining low interest rates.Only CBoth A and BBoth B and COnly BNone of theseOption C
Big banks are hiring Mibanco’s staff and giving low-rate loans are the challenges for Mibanco.
- Which of the following cannot be said about the Garameen Foundation?
(A) It regulates the activities of microfinance firms in developing countries.
(B) It functions primarily in Asia and Latin America.
(C) It approves of privatizing microfinance institutions.Both A and BOnly BBoth A and CAll A, B, CNone of the aboveOption B
It functions in Lu Asia and Africa.
- Which of the following can be said about microfinance? The majority of microfinance around the world is provided by NGOs.Microfinance was not profitable till commercial banks entered the sector.Microfinance is experiencing a high growth rate at present.Microfinance institutions are governed by guidelines set up by cGAP.Microfinance is the optimal solution to alleviate poverty.Option E
Microfinance gives loans on low interest rate and is helpful to decrease poverty.
- Choose the word which is most similar in meaning to the word printed in bold as used in the passage.
The most similar word for verge is ‘threshold,’ which means edge.
The economy consist of (A)/ individuals seeking prosperity, yet (B)/ most of it’s laws and many (C)/ of its customs is about social harmony. (D)ABCDAll are correctOption B
In part A, there is subject-verb agreement violation. ‘Economy’ is a singular term hence, the verb must also be singular. However, a plural verb is used. Therefore, ‘consist’ should be replaced with ‘consists’ to make it correct.
In part C, it should be ‘its’ rather than ‘it’s’. It’s is a contraction of “it is” or “it has.” ‘Its’ is a possessive determiner we use to say that something belongs to or refers to something.
In part D, there is again subject-verb agreement violation. ‘Is’ must be replaced with ‘are’ to form a grammatically correct sentence.
- The enormous national debt (A)/ amassed in a last eight years (B)/ makes all these apparent (C)/ prosperity nothing but an house of cards. (D) ABCDAll are correctOption A
In part B, ‘the’ should be used rather than ‘a’. The definite article ‘the’ is used when you are talking about something in particular. The indefinite article ‘a’ is used when you are talking about something in general.
In part C, ‘these’ should be replaced with ‘this’ to agree with the subject ‘prosperity’.
In part D, ‘an’ is erroneous. The choice between ‘a’ and ‘an’ is determined by the sound of the alphabet. If a word starts with a consonant but gives the sound of a vowel, ‘an’ should be used. Therefore, ‘an’ must be replaced with ‘a’ to form a grammatically correct sentence.
- Advertising may be (A)/ describe as the science (B)/ for arresting human intelligence (C)/ enough long to get money from it. (D) ABCDAll are correctOption A
In part B, ‘describe’ is erroneous. ‘Be’ is followed by a participle rather than an infinitive. Hence, it should be ‘described’ rather than ‘describe’.
In part C, the preposition ‘for’ is incorrect. It should be ‘of’ instead of ‘for’ because ‘of’ indicates an association between two entities.
In part D, ‘enough long’ is incorrect. ‘Enough’ as an adverb meaning ‘to the necessary degree’ is used after the adjective or adverb that it is modifying, and not before it as other adverbs do. Hence, it should be ‘long enough’
- The very nature for anonymous (A)/ reports naturally prevented (B)/ some possibility of retribution (C)/ against wrong-doers report the incident. (D)/ ABCDAll are correctOption B
In part A, the preposition ‘for’ is incorrect. It should be ‘of’ instead of ‘for’ because ‘of’ indicates an association between two entities.
In part C, ‘some’ is incorrect. The sentence has a negative connotation. ‘Any’ is used for questions and negatives while ‘some’ is used for positive sentences. Hence, ‘some’ should be replaced with ‘any’ to make it correct.
In part D, the form of the verb is incorrect. ‘Report’ should be replaced with ‘reporting’ to form a grammatically correct sentence.
Directions(7-10): In the given question, a sentence is divided into four parts. There are errors in three parts. Choose the part which doesn’t have an error. If all the four parts are correct, mark E, i.e. ‘All are correct’ as the answer.