Credit is an important instrument for rural development. Most of the agricultural chores still depend on manual labour. It also involves techniques which are outdated and result in low outputs. The investment in rural areas has been on a low which effectively results in low output and productivity in all kinds of activities. A capital infusion for a jump in productivity in reference to both agricultural and non-agricultural activities can be achieved by reforming credit and banking system. During the gestation period between sowing and harvesting seasons, farmers need credit to make ends meet, their general needs, initial requirements etc. Additionally, they also need credit to venture into modern agricultural techniques, to buy cattle, land etc.
The difference in monetary activities of rural people relative to urban people led to the realization of NABARD (National Bank For Agricultural And Rural Development), in addition to the presence of RBI.
The post-independence period saw exploitation of rural poor in need of credit, by the hands of moneylenders and traders. Loans were granted at very high-interest rates which ultimately pulled defaulters into a debt trap, robbing them out of credit. To stop this exploitation NABARD was established to provide rural areas with easy credit. Although RBI is the national banking apex body, NABARD has been given powers that establish it as the apex banking body in rural India which regulates all the credit and banking activities of rural India. Although NABARD has been proving to be a step in the right direction, the problem with formal banking system is that some kind of collateral is required. The rural poor in need of urgent credit, don’t generally possess any collateral. Consequently, they are ruled out of the formal banking system. To help such kind of people self-help groups (SHG) emerged on the scene. They are successfully bridging the gap between formal credit system and rural poor.
Such groups dispense small credit to the needy members, who need to provide a minimum sum to the pool initially. Then loans can be taken from the sum collected at very cheap interest rates. For this reason, by March-end 2003, more than seven lakh SHGs were reported operational. Such credit provisions are referred to as micro-credit programmes.
The banking and credit system in rural India has come a long way. With credit available at low-interest rates through operation of NABARD and microcredit generation by the various self-help groups, less poor are falling into the debt trap. After the advent of the green revolution, productivity in agriculture increased manifolds. In essence modern techniques, high yielding variety seeds, sustainable activities etc. have been promoting productivity and output. But the formal banking system has been proving inadequate in lending to worthwhile borrowers and effective loan recovery. By and large, the number of loan defaulters is rising. The poor are forced to look in direction of informal moneylenders, who exploit them. Hence some changes are required.
The rural banks need to establish a banking relationship with the people and scrap away the image of just money lenders. The banking system in rural India needs a reform, considering the difference in livelihoods of urban and rural people. Leniency on the part of the government in the collection of taxes inculcated a habit of not repaying borrowed amounts among people which needs to be altered. Banks need to educate people about thrift generation and efficient utilization of financial resources to become feasible again.
Q1. What is/are the reason(s) that make(s) the introduction of credit system important in rural areas?
(a) To automatize most of the agriculture activities which are currently based on manual labour
(b) Farmers can venture into modern agricultural techniques
(c) To enhance the productivity of both the agricultural and non-agricultural activities
(d) To meet the basic needs of farmers during the gestation period
(e) All of these
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Q2. Which one of the following is the change not suggested in the passage for the formal banking system in the rural sector?
(a) Banks need to build a relationship with people while removing the image of just money lenders.
(b) Banks need to formulate policies according to the difference in the livelihood of urban and rural people.
(c) Banks need to spread awareness about thrift generation and efficient utilization of financial resources
(d) Banks need to lower the interest rates to increase the credit distribution among the people.
(e) Banks should adopt a more strict policy for collecting taxes which would suppress the habit of not repaying the loans.
Q3. What was the justification to establish the Self-help groups for the rural poor?
(a) SHGs provide long term institutional loans for the rural people.
(b) SHGs provide the sum to repay the easy monthly installments for the loans.
(c) A programme for credit was required at the proximity.
(d) Rural poor didn’t possess any collateral to mortgage for the urgent loans.
(e) None of these
Q4. What led to the establishment of NABARD for the rural sector?
(i) To provide easy credit in the rural areas.
(ii) Money lenders and traders used to charge high rate of interests to trap the defaulters into the debt trap.
(iii) To punish the offenders who were illegitimately providing the loans to the rural sector
(iv) The difference in monetary activities of rural people as compared to urban people
(a) Only (i)
(b) Only (iv)
(c) Only (i) and (iv)
(d) Only (i) (ii) and (iv)
(e) All (i) (ii) (iii) and (iv)
Q5. How the banking reforms have improved the banking and credit system in the Rural India?
(i) Low interest rates are available through NABARD and microcredit generation
(ii) Less people are falling in the debt trap
(iii) Insurance from insufficient rainfall has led to the sense of security among the rural poor
(a) Only (i)
(b) Only (iii)
(c) Only (i) and (ii)
(d) Only (i) and (iv)
(e) All (i) (ii) and (iii)
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Q6. Suggest the most appropriate title for the given passage.
(a) Credit and Banking in Rural Areas
(b) NABARD: A Lifeline for rural poor
(c) Formal banking system and its loopholes
(d) SHG: A helping hand
(e) RBI and its reforms
Q7. Choose the word which is most nearly the OPPOSITE in meaning to the word ‘infusion’ printed in bold as used in the passage.
(a) Addition
(b) Acceptance
(c) Ratification
(d) Permission
(e) Eviction
Q8. Choose the word which is most nearly the SYNONYM of the word ‘Leniency’ printed in bold as used in the passage.
(a) Rigid
(b) Severe
(c) Stern
(d) Tolerance
(e) Meanness
Directions (9 -15): In the following passage there are blanks, each of which has been numbered. These numbers are printed below the passage and against each, five words/phrases are suggested, one of which fits the blank appropriately. Find out the appropriate word/phrase for each blank.
Q9. There are once again (9) ______________ of a possible global economic (10) ____________________ in the air. Whether these forebodings will (11) ___________________________is a matter for economists to debate. But it is worth asking if there were to be another financial crisis in the near future, would political (12) __________________ in the world have the (13) ____________________ to respond effectively. After the 2008 crisis, the global system (14) _____________________ a response to contain the immediate crisis. It was by no means adequate to deal with the deep structural issues (15) ________________________ the global economy. But there was, nonetheless, a coordinated response of some kind.
(a) breaks
(b) revelation
(c) study
(d) murmurings
(e) research
Q10. There are once again (9) ______________ of a possible global economic (10) ____________________ in the air. Whether these forebodings will (11) ___________________________is a matter for economists to debate. But it is worth asking if there were to be another financial crisis in the near future, would political (12) __________________ in the world have the (13) ____________________ to respond effectively. After the 2008 crisis, the global system (14) _____________________ a response to contain the immediate crisis. It was by no means adequate to deal with the deep structural issues (15) ________________________ the global economy. But there was, nonetheless, a coordinated response of some kind.
(a) turbulence
(b) boom
(c) sound
(d) policies
(e) easiness
Q11. There are once again (9) ______________ of a possible global economic (10) ____________________ in the air. Whether these forebodings will (11) ___________________________is a matter for economists to debate. But it is worth asking if there were to be another financial crisis in the near future, would political (12) __________________ in the world have the (13) ____________________ to respond effectively. After the 2008 crisis, the global system (14) _____________________ a response to contain the immediate crisis. It was by no means adequate to deal with the deep structural issues (15) ________________________ the global economy. But there was, nonetheless, a coordinated response of some kind.
(a)require
(b) suggest
(c)allocate
(d) transact
(e) transpire
Q12. There are once again (9) ______________ of a possible global economic (10) ____________________ in the air. Whether these forebodings will (11) ___________________________is a matter for economists to debate. But it is worth asking if there were to be another financial crisis in the near future, would political (12) __________________ in the world have the (13) ____________________ to respond effectively. After the 2008 crisis, the global system (14) _____________________ a response to contain the immediate crisis. It was by no means adequate to deal with the deep structural issues (15) ________________________ the global economy. But there was, nonetheless, a coordinated response of some kind.
(a) junctions
(b) configurations
(c) renovations
(d) transfer
(e) placements
Q13. There are once again (9) ______________ of a possible global economic (10) ____________________ in the air. Whether these forebodings will (11) ___________________________is a matter for economists to debate. But it is worth asking if there were to be another financial crisis in the near future, would political (12) __________________ in the world have the (13) ____________________ to respond effectively. After the 2008 crisis, the global system (14) _____________________ a response to contain the immediate crisis. It was by no means adequate to deal with the deep structural issues (15) ________________________ the global economy. But there was, nonetheless, a coordinated response of some kind.
(a) charges
(b) bill
(c) wherewithal
(d) arrears
(e) withdrawals
Q14. There are once again (9) ______________ of a possible global economic (10) ____________________ in the air. Whether these forebodings will (11) ___________________________is a matter for economists to debate. But it is worth asking if there were to be another financial crisis in the near future, would political (12) __________________ in the world have the (13) ____________________ to respond effectively. After the 2008 crisis, the global system (14) _____________________ a response to contain the immediate crisis. It was by no means adequate to deal with the deep structural issues (15) ________________________ the global economy. But there was, nonetheless, a coordinated response of some kind.
(a) lost
(b) caught
(c) mounted
(d) diminished
(e) disfigured
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Q15. There are once again (9) ______________ of a possible global economic (10) ____________________ in the air. Whether these forebodings will (11) ___________________________is a matter for economists to debate. But it is worth asking if there were to be another financial crisis in the near future, would political (12) __________________ in the world have the (13) ____________________ to respond effectively. After the 2008 crisis, the global system (14) _____________________ a response to contain the immediate crisis. It was by no means adequate to deal with the deep structural issues (15) ________________________ the global economy. But there was, nonetheless, a coordinated response of some kind.
(a) ailing
(b) strengthening
(c) boosting
(d) twisting
(e) gaining
SOLUTIONS:
S1. Ans. (e)
Sol. Option (e) is the correct choice as all the given options are mentioned in the first paragraph of the passage signifying the importance of credit system in the rural sector. Refer to the lines of firs paragraph “Most of the agricultural chores still depend on manual labour. It also involves techniques which are outdated and result in low outputs… Additionally, they also need credit to venture into modern agricultural techniques, to buy cattle, land etc.”
S2. Ans. (d)
Sol. Among the given sentences, option (d) is not suggested in the paragraph. Refer to the last paragraph “The rural banks need to establish a banking relationship… efficient utilization of financial resources”. However, sentence (d) is nowhere mentioned in the given passage. Hence, option (d) is the most suitable answer choice.
S3. Ans. (d)
Sol. Refer to the 9th line of the 2nd paragraph “The rural poor in need of urgent credit, don’t generally possess any collateral. Consequently, they are ruled out of the formal banking system. To help such kind of people self-help groups (SHG) emerged on the scene”. All the other options are irrelevant in the context of the passage. Hence, option (d) is the most suitable answer choice.
S4. Ans. (d)
Sol. NABARD was established for all the reasons given above except for reason (iii). Refer to the second paragraph “The difference in monetary activities… rural areas with easy credit”. However, it does not mention about punishing the culprits who were ill-practicing regarding the distribution of loans. Since, (i), (ii) and (iv) are correct, option (d) becomes the most suitable answer choice.
S5. Ans. (c)
Sol. Refer to the second sentence of the fourth paragraph, “With credit available at low-interest rates through operation of NABARD and microcredit generation by the various self-help groups, less poor are falling into the debt trap. After the advent of the green revolution, productivity in agriculture increased manifolds”. Moreover, it also states “. In essence modern techniques, high yielding variety seeds, sustainable activities etc. have been promoting productivity and output”. Thus, it does not mention about the insurance against rainfall for the poor people. Hence, option (c) is the most suitable answer choice.
S6. Ans. (a)
Sol. “Credit and Banking in Rural Areas” is the most appropriate title for the given passage as it covers all the aspects of rural banking system discussed in the passage. Hence, option (a) is the most suitable answer choice.
S7. Ans. (e)
Sol. Infusion means the introduction of a new element or quality into something. Eviction means the action of expelling someone from a property; expulsion. Since they are antonyms of each other; option (e) is the most suitable answer choice.
S8. Ans. (d)
Sol. Leniency means the fact or quality of being more merciful or tolerant than expected; clemency. Tolerance means the ability or willingness to tolerate the existence of opinions or behaviour that one dislikes or disagrees with. Since they are synonyms of each other; option (d) is the most suitable answer choice.
S9. Ans. (d)
Sol. The paragraph is describing about expected changes and their effects in the economy. Here, the most suitable word is “murmurings” as it aptly fits in the context of the paragraph. Murmurings means a low or indistinct continuous sound. All the other words fail to fill the blank appropriately. Hence, option (d) is the most suitable answer choice.
Revelation means a surprising and previously unknown fact that has been disclosed to others.
Research means discover or verify information for use in (a book, programme, etc.).
S10. Ans. (a)
Sol. The paragraph is describing about expected changes and their effects in the economy. Here, the most suitable word is “turbulence” as the later part of the paragraph hints that a possible “financial crisis” might occur in near future. Turbulence means a state of conflict or confusion. All the other words fail to fill the blank appropriately. Hence, option (a) is the most suitable answer choice.
S11. Ans. (e)
Sol. The paragraph is describing about expected changes and their effects in the economy. Here, the most suitable word is “transpire” as it aptly fits in the context of the paragraph. If it transpires that something has happened, this previously secret or unknown fact becomes known. All the other words fail to fill the blank appropriately. Hence, option (e) is the most suitable answer choice.
Transact means conduct or carry out (business).
Allocate means distribute (resources or duties) for a particular purpose.
S12. Ans. (b)
Sol. The paragraph is describing about expected changes and their effects in the economy. Here, the most suitable word is “configurations” as it aptly fits in the context of the paragraph. Configuration means an arrangement of parts or elements in a particular form, figure, or combination. All the other words fail to fill the blank appropriately. Hence, option (b) is the most suitable answer choice.
Junctions mean a point where two or more things are joined.
Renovations mean the action of renovating a building.
S13. Ans. (c)
Sol. The paragraph is describing about expected changes and their effects in the economy. Here, the most suitable word is “Wherewithal” as it aptly fits in the context of the paragraph. Wherewithal means the money or other means needed for a particular purpose. All the other words fail to fill the blank appropriately. Hence, option (c) is the most suitable answer choice.
S14. Ans. (c)
Sol. The paragraph is describing about expected changes and their effects in the economy. Here, the most suitable word is “Mounted” as it aptly fits in the context of the paragraph. Mounted in context of the paragraph means set in or attach to a backing or setting. All the other words fail to fill the blank appropriately. Hence, option (c) is the most suitable answer choice.
S15. Ans. (a)
Sol. The paragraph is describing about expected changes and their effects in the economy. Here, the most suitable word is “Ailing” as it aptly fits in the context of the paragraph. Ailing means in poor health. All the other words fail to fill the blank appropriately. Hence, option (a) is the most suitable answer choice.
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