Set-22 Reading Comprehension For SBI PO and SBI Clerk 2019 | Must Go Through These Questions

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Directions (1-5): Read the following Passage carefully and answer the Following Questions

The most recent time Moses Kibet Biegon needed a quick loan was when his roof blew away. He got one from the Imarisha Savings and Credit Co-operative, in Kericho in western Kenya. Imarisha channels the savings of its 57,000 members into loans for school fees, business projects or, in Mr Biegon’s case, roof repairs. It runs a fund to help with medical bills. And it pays dividends to its members from its investments, which include a shopping plaza that it opened last year.

Savings and credit co-operatives (SACCOs) like Imarisha are the African version of credit unions: member-owned co-ops, usually organised around a community or workplace. Some are rural self-help groups with a few dozen members and a safe. Others have branch networks and mobile apps. The largest SACCOs rival banks; Mwalimu National, which serves Kenyan teachers, has even bought one.

The co-operative model brings “a more humane face” to finance, argues Robert Shibutse, Mwalimu’s boss. But SACCOs are not just a cuddly sideshow. In Kenya, where they are strongest, they provide more loans for land, housing, education and agriculture than banks or microfinance institutions. The World Bank estimates that SACCOs and other co-operatives account for over 90% of all housing credit in the country. In Rwanda they attract twice as many savers as banks. Membership is growing in Ghana and Tanzania.

SACCOs can be generous lenders, in part because their members are often colleagues or neighbours. That makes it easier to judge risks, urge repayment and serve the folk that banks tend to shun. They fill a “vacuum” in rural areas, says Lance Kashugyera, who leads a Ugandan government project on financial inclusion. In Kenya SACCOs typically offer better interest rates than banks. But members can view a loan as a right and are often allowed to borrow up to three times their savings. In 2016 the largest Kenyan SACCOs had loan-to-deposit ratios of 109%, meaning they had to use other sources of funding than their members. “The demand for credit is high, but the savings culture is poor,” laments an officer at a Ugandan SACCO.

In Uganda the greatest danger has come from politicians bearing gifts. In 2005 the government promised “a SACCO in every sub-county”, backed up with donations and cheap credit. Local bigshots hastily formed co-ops to get their hands on the money. Members saw loans as a handout from the ruling party and made little effort to repay. When the cash ran out, SACCOs failed. “They were a bit political,” sighs James Lubambo, an official in Iganga district, reeling off the names of 11 local SACCOs that have recently collapsed.

Indeed, the state of SACCOs often reflects a country’s politics. After a poor showing in Kampala in last year’s elections, Yoweri Museveni, Uganda’s president, has personally delivered 100m shilling ($28,000) cheques to SACCOs in the city. In Rwanda, by contrast, an efficient but overbearing government has built a successful SACCO sector from scratch—even if a quarter of members felt obliged to join out of a sense of civic duty, according to one survey.

There are better ways for governments to help. One is by plugging the yawning gaps in regulation, which in some countries bundles SACCOs together with other, non-financial co-operatives. Occasional tales of failure and fraud also do little for public confidence. In 2010 Kenya created a new regulator for the largest “deposit-taking” SACCOs: it is gradually enforcing capital requirements, but remains hugely under-resourced. Uganda brought in a new set of rules on July 1st, after more than a decade of discussion. It is also running a seven-year project which, among other things, will train leaders in small rural SACCOs to manage savings and credit better.

There are other challenges. Kenyan SACCOs face a squeeze as a rate cap on bank loans intensifies competition for the most creditworthy borrowers. And they will need to adapt to mobile banking, which is helping banks reach customers that SACCOs could once keep to themselves. But the co-operative model remains distinctive. Mr Biegon doubts that a bank would have financed his roof repairs. The SACCO, he says, is “our hope”.

1. According to the passage what is the main benefits of SACCOs?

  1. SACCOs can help financially its customers in medical emergency.
  2. SACCOs can help their customers for setting up their business.
  3. SACCO’s are mainly helping poor children to get their education.

2. Which of the following is true about SACCOs?

  1. SACCOs are basically a group of people cooperating each other financially.
  2. SACCOs are an initiative taken by African government.
  3. SACCOs main aim is to distribute loans among its customer.

3. What is the main problem with SACCOs?

  1. SACCOs are giving loan to their customers easily.
  2. SACCOs are giving loan to its customer upto three times of his saving.
  3. Loan to deposit ratio in SACCOs is very high.

4. What are the reasons told by author for SACCOs failure?

  1. Loan to deposit ration of SACCOs is very high.
  2. When SACCOs become little political , people made very less effort to repay loan.
  3. Lack of trust earned from its customer.

5. What are the suggestions of the author for revival of SACCOs?

  1. SACCOs will need to adapt to mobile banking.
  2. Reducing the loan to deposit ratio.
  3. Government should take action against borrowers.

(Directions 6-10): Read the following passage carefully and answer the questions given below it.

Ten years ago, BNP Paribas, a French bank, temporarily suspended dealings in three funds, citing “the complete evaporation of liquidity in certain market segments of the US securitisation market”. Many people treat this as the start of the credit crunch but one can trace it back to the need for Bear Stearns to rescue hedge funds that invested in mortgage-backed securities in June, or the signs of home loan defaults and failing mortgage lenders that emerged in late 2006. The subsequent tightening of credit and loss of confidence in the banking system eventually led to the collapse of Lehman Brothers, when the crisis reached its height in the autumn of 2008. The inevitable question on the occasion of such anniversaries is: could it happen again? Total debt has risen, rather than fallen, over the last decade, reaching $217trn or 327% of GDP, according to the Institute for International Finance. But the debt is differently distributed from 2007; more of it is owed by governments and more of it is owned by central banks. Since these banks have no incentive to hassle countries for repayment, the air of crisis has dissipated. Banks have more capital, making them more secure. And low interest rates have made servicing debt more affordable for both consumers and companies.

Nevertheless, we are nowhere near “normal” conditions; although America’s economy has been recovering for a long while and unemployment is low, the Federal Reserve is proceeding very cautiously with tighter rates. And the ECB, Bank of England and Bank of Japan have not even started on the process. Given all this, where might the next crisis come from? Clearly, the two obvious possibilities are a sharp rise in defaults (causing lenders to lose confidence) or a signficant increase in interest rates (which would trigger the same process). Defaults can occur without a rate rise if the economy goes into recession. That could result from war with North Korea (apparently God has authorised President Trump to do this) or a less frightening but still significant trade dispute with China. It could result from internal Chinese debt problems since that is where recent debt growth has been concentrated. Or perhaps it will happen in the corporate bond markets, which are less liquid than they used to be, and could suffer a panic sell-off by investors in bond funds. Other possibilities include student debt or car-loan debt, where consumers may have become overstretched again. The more likely possibility is a monetary policy mistake. When the Fed started to use quantitative easing, many people cited the “ketchup principle” for the inflation risk (“shake and shake the ketchup bottle, first a little, then a lot’ll”). The inflation never occurred but there is the risk that in the unwinding of policy, all will seem calm until the market suddenly breaks. Something similar happened in 1994 when the bond market was badly affected by an earlier round of Fed tightening. And the Fed is the most likely culprit, not just because it is first to tighten but because America’s monetary policy has ripple effects through the world, via the dollar and the American economy’s huge weight in global GDP. The next crisis may come from Washington.

6.What was the reason for the collapse of Lehman Brothers in 2008?

  1. Tightening of credit in banking system lead to the collapse of Lehman Brothers.
  2. People lost their confidence in banking system.
  3. Government policies towards banking system are not good.

7. Why the author thinks that scenario of 2008 can happen again after a decade?

  1. Because it is very common that economic crisis often repeats after a decade.
  2. Because of the increase in total debts in last decade.
  3. Because of the different distribution of the debt compared to last time.

8. What are the reasons on which basis on can said that economic crisis of 2008 will not repeat itself?

  1. Because total debt has risen as compared to 2008.
  2. Total debt is differently distributed as compared to 2007.
  3. It is easy to repay the debt due to low interest rate.

9. What can be the political reasons for the upcoming crisis ?

  1. War between America and North Korea.
  2. Trade dispute between China and America.
  3. Change in the rate of interest by the government for the shake of vote bank.

10. What can be the suitable title for the passage?

  1. Reasons for upcoming economic crisis.
  2. Reasons for the economic crisis of 2008.
  3. Possibilities for the next economic crisis.
  4. Can next economic crisis happen?

 

 

Check the answer below

 

 

 

Directions (1-5): Read the following Passage carefully and answer the Following Questions

The most recent time Moses Kibet Biegon needed a quick loan was when his roof blew away. He got one from the Imarisha Savings and Credit Co-operative, in Kericho in western Kenya. Imarisha channels the savings of its 57,000 members into loans for school fees, business projects or, in Mr Biegon’s case, roof repairs. It runs a fund to help with medical bills. And it pays dividends to its members from its investments, which include a shopping plaza that it opened last year.

Savings and credit co-operatives (SACCOs) like Imarisha are the African version of credit unions: member-owned co-ops, usually organised around a community or workplace. Some are rural self-help groups with a few dozen members and a safe. Others have branch networks and mobile apps. The largest SACCOs rival banks; Mwalimu National, which serves Kenyan teachers, has even bought one.

The co-operative model brings “a more humane face” to finance, argues Robert Shibutse, Mwalimu’s boss. But SACCOs are not just a cuddly sideshow. In Kenya, where they are strongest, they provide more loans for land, housing, education and agriculture than banks or microfinance institutions. The World Bank estimates that SACCOs and other co-operatives account for over 90% of all housing credit in the country. In Rwanda they attract twice as many savers as banks. Membership is growing in Ghana and Tanzania.

SACCOs can be generous lenders, in part because their members are often colleagues or neighbours. That makes it easier to judge risks, urge repayment and serve the folk that banks tend to shun. They fill a “vacuum” in rural areas, says Lance Kashugyera, who leads a Ugandan government project on financial inclusion. In Kenya SACCOs typically offer better interest rates than banks. But members can view a loan as a right and are often allowed to borrow up to three times their savings. In 2016 the largest Kenyan SACCOs had loan-to-deposit ratios of 109%, meaning they had to use other sources of funding than their members. “The demand for credit is high, but the savings culture is poor,” laments an officer at a Ugandan SACCO.

In Uganda the greatest danger has come from politicians bearing gifts. In 2005 the government promised “a SACCO in every sub-county”, backed up with donations and cheap credit. Local bigshots hastily formed co-ops to get their hands on the money. Members saw loans as a handout from the ruling party and made little effort to repay. When the cash ran out, SACCOs failed. “They were a bit political,” sighs James Lubambo, an official in Iganga district, reeling off the names of 11 local SACCOs that have recently collapsed.

Indeed, the state of SACCOs often reflects a country’s politics. After a poor showing in Kampala in last year’s elections, Yoweri Museveni, Uganda’s president, has personally delivered 100m shilling ($28,000) cheques to SACCOs in the city. In Rwanda, by contrast, an efficient but overbearing government has built a successful SACCO sector from scratch—even if a quarter of members felt obliged to join out of a sense of civic duty, according to one survey.

There are better ways for governments to help. One is by plugging the yawning gaps in regulation, which in some countries bundles SACCOs together with other, non-financial co-operatives. Occasional tales of failure and fraud also do little for public confidence. In 2010 Kenya created a new regulator for the largest “deposit-taking” SACCOs: it is gradually enforcing capital requirements, but remains hugely under-resourced. Uganda brought in a new set of rules on July 1st, after more than a decade of discussion. It is also running a seven-year project which, among other things, will train leaders in small rural SACCOs to manage savings and credit better.

There are other challenges. Kenyan SACCOs face a squeeze as a rate cap on bank loans intensifies competition for the most creditworthy borrowers. And they will need to adapt to mobile banking, which is helping banks reach customers that SACCOs could once keep to themselves. But the co-operative model remains distinctive. Mr Biegon doubts that a bank would have financed his roof repairs. The SACCO, he says, is “our hope”.

1. Question

According to the passage what is the main benefits of SACCOs?

  1. SACCOs can help financially its customers in medical emergency.
  2. SACCOs can help their customers for setting up their business.
  3. SACCO’s are mainly helping poor children to get their education.
Ans: 4
SACCOs don’t have main aim to helping poor children according to the passage.

2. Question

Which of the following is true about SACCOs?

  1. SACCOs are basically a group of people cooperating each other financially.
  2. SACCOs are an initiative taken by African government.
  3. SACCOs main aim is to distribute loans among its customer.
Ans: 1
2 and 3 are wrong according to the passage given.

3. Question

What is the main problem with SACCOs?

  1. SACCOs are giving loan to their customers easily.
  2. SACCOs are giving loan to its customer upto three times of his saving.
  3. Loan to deposit ratio in SACCOs is very high.
Ans: 4
According to the passage 2 and 3 are main problems with SACCOs which is higher loan and loan to deposit ratio.

4. Question

What are the reasons told by author for SACCOs failure?

  1. Loan to deposit ration of SACCOs is very high.
  2. When SACCOs become little political , people made very less effort to repay loan.
  3. Lack of trust earned from its customer.
Ans: 4
3 is not mentioned by the author in the passage.

5. Question

What are the suggestions of the author for revival of SACCOs?

  1. SACCOs will need to adapt to mobile banking.
  2. Reducing the loan to deposit ratio.
  3. Government should take action against borrowers.
Ans: 4
According to the author there should have less political interfere in SACCOs . 1 and 2 are the main suggestion for revival of SACCOs

(Directions 6-10): Read the following passage carefully and answer the questions given below it.

Ten years ago, BNP Paribas, a French bank, temporarily suspended dealings in three funds, citing “the complete evaporation of liquidity in certain market segments of the US securitisation market”. Many people treat this as the start of the credit crunch but one can trace it back to the need for Bear Stearns to rescue hedge funds that invested in mortgage-backed securities in June, or the signs of home loan defaults and failing mortgage lenders that emerged in late 2006. The subsequent tightening of credit and loss of confidence in the banking system eventually led to the collapse of Lehman Brothers, when the crisis reached its height in the autumn of 2008. The inevitable question on the occasion of such anniversaries is: could it happen again? Total debt has risen, rather than fallen, over the last decade, reaching $217trn or 327% of GDP, according to the Institute for International Finance. But the debt is differently distributed from 2007; more of it is owed by governments and more of it is owned by central banks. Since these banks have no incentive to hassle countries for repayment, the air of crisis has dissipated. Banks have more capital, making them more secure. And low interest rates have made servicing debt more affordable for both consumers and companies.

Nevertheless, we are nowhere near “normal” conditions; although America’s economy has been recovering for a long while and unemployment is low, the Federal Reserve is proceeding very cautiously with tighter rates. And the ECB, Bank of England and Bank of Japan have not even started on the process. Given all this, where might the next crisis come from? Clearly, the two obvious possibilities are a sharp rise in defaults (causing lenders to lose confidence) or a signficant increase in interest rates (which would trigger the same process). Defaults can occur without a rate rise if the economy goes into recession. That could result from war with North Korea (apparently God has authorised President Trump to do this) or a less frightening but still significant trade dispute with China. It could result from internal Chinese debt problems since that is where recent debt growth has been concentrated. Or perhaps it will happen in the corporate bond markets, which are less liquid than they used to be, and could suffer a panic sell-off by investors in bond funds. Other possibilities include student debt or car-loan debt, where consumers may have become overstretched again. The more likely possibility is a monetary policy mistake. When the Fed started to use quantitative easing, many people cited the “ketchup principle” for the inflation risk (“shake and shake the ketchup bottle, first a little, then a lot’ll”). The inflation never occurred but there is the risk that in the unwinding of policy, all will seem calm until the market suddenly breaks. Something similar happened in 1994 when the bond market was badly affected by an earlier round of Fed tightening. And the Fed is the most likely culprit, not just because it is first to tighten but because America’s monetary policy has ripple effects through the world, via the dollar and the American economy’s huge weight in global GDP. The next crisis may come from Washington.

6. Question

What was the reason for the collapse of Lehman Brothers in 2008?

  1. Tightening of credit in banking system lead to the collapse of Lehman Brothers.
  2. People lost their confidence in banking system.
  3. Government policies towards banking system are not good.
Ans: 4
1 and 2 are the amin reason for collapse , 3 can not be concluded from the passage.

7. Question

Why the author thinks that scenario of 2008 can happen again after a decade?

  1. Because it is very common that economic crisis often repeats after a decade.
  2. Because of the increase in total debts in last decade.
  3. Because of the different distribution of the debt compared to last time.
Ans: 2
1 is not given anywhere in the passage, due to 3 economic crisis cannot happen. Only 2 is the main reason due to which economic crisis may happen.

8. Question

What are the reasons on which basis on can said that economic crisis of 2008 will not repeat itself?

  1. Because total debt has risen as compared to 2008.
  2. Total debt is differently distributed as compared to 2007.
  3. It is easy to repay the debt due to low interest rate.
Ans: 3
2 and 3 are the main reason on which basis one can said that economic crisis cannot repeat itself.

9. Question

What can be the political reasons for the upcoming crisis ?

  1. War between America and North Korea.
  2. Trade dispute between China and America.
  3. Change in the rate of interest by the government for the shake of vote bank.
Ans: 4
3 is not the reason which can be concluded from the passage.

10. Question

What can be the suitable title for the passage?

  1. Reasons for upcoming economic crisis.
  2. Reasons for the economic crisis of 2008.
  3. Possibilities for the next economic crisis.
  4. Can next economic crisis happen?
Ans: 2
3 and 4 can be the suitable title because in this passage author discussed about the possibilities of crisis happening and the possibilities due to which crisis cannot happen.