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High Level Reading Comprehension for IBPS Clerk Mains will help you learn concepts on important topics in English Section.This “High Level Reading Comprehension” is also important for other banking exams such as IBPS PO, IBPS Clerk, SBI Clerk, IBPS RRB Officer, IBPS RRB Office Assistant, IBPS SO, SBI SO and other competitive exams.
High-Level Reading Comprehension: Set – 49
Directions:(1-10) Read the passage carefully and answer the questions given below it. Certain words/ phrases are given in bold to help you locate them while answering some of the questions.
A Reserve Bank of India panel has submitted a report on financial inclusion. It proposes that priority sector lending by banks be raised and that banks be mandated to open accounts for every adult Indian by January 2016. The recommendations do not challenge the RBI’s basic approach to financial inclusion. This approach, which has been to mandatebanks to undertake financial inclusion, might have spread public sector bank branches in rural areas for some years, helped open bank accounts and directed credit, but it has stopped yielding results. What India needs is a new approach, which encourages competition and innovation, rather than more mandates.
India’s approach to financial inclusion has been bank-centric. So far, it has focused on bank nationalisation, continued with government ownership of banks and their recapitalization. The way to ensure inclusion has been priority sector lending, which mandates that 40 per cent of each bank’s lending be to weaker sectors – small-scale industries, agriculture and exports – to which the bank might not have lent otherwise. The RBI panel now recommends raising this share to 50 per cent.
The panel’s recommendations are in sync with the RBI’s recent guidelines for the grant of licences to new banks. These require that the bank have a plan for financial inclusion and that it open 25 per cent of its branches in unbanked rural areas. This approach is similar to the one that required PSU banks to open rural branches. By once again mandating financial inclusion, this time for private sector licence applications, instead of focusing on competition and innovation, the RBI is essentially doing more of the same.
Financial inclusion may be defined as assess to a range of financial services in a convenient, flexible, reliable and continuous manner from formal, regulated financial institutions. Even though access can be ensured by mandates, the quality parameters of access may be compromised in the process. This is seen in the low usage of accounts and the poor asset quality of priority sector portfolios. Such inclusion confuses ends with means. A bank account is meant to fulfuil certain functions–simply opening an account is not enough. The panel proposes to make it mandatory for every Indian over the age of 18 to have a bank account.
An often overlooked consequence of the mandate-driven approach to inclusion, as pursued by the RBI, is that the costs of this inclusion are levied on the investors and consumers of banks. The losses from unused bank accounts and poorly performing priority sector assets are eventually borne by the investors and consumers. If the political objective of opening bank accounts is to be met, or lending to certain sectors ensured, it should be transparent as a line item on the government’s budget. Instead, it is done through a cross-subsidy that effectively makes other customers pay for the political goals of a government pushing its agenda through banks.
This approach has been accompanied by a neglect of the other drivers of inclusion–competition and innovation. In the last 11 years, the Indian economy has grown rapidly, but no banking licences have been given in this time. The trend has been that once a decade, the RBI decides to give a few licences, but there is no window to get licences during this period. The incumbent banks feel little or no pressure to reach out to unbanked areas and people with their services. This, in turn, necessitates a mandate-driven approach to financial inclusion. Despite decades of RBI mandates, rural customers turn to informal channels of RBI mandates, rural customers turn to informal channels and unregulated financial firms.
1. What was the basic purpose of the RBI’s financial inclusion?
A. To spread public sector bank branches in rural areas
B. To provide financial assistance to farmers and artisans at a lower rate
C. To encourage competition between private and public sector banks
D. To force every Indian citizen to open bank accounts with public sector banks
E. None of these
2.According to the passage, what is/are the conditions for granting licences to new banks as per the recent recommendations of the RBI?
A. The entity seeking a licence for opening a new bank should have a minimum paid-up capital of Rs. 500 crore
B. All PSU banks should open at least 25 per cent of its branches in rural areas.
C. New banks should open one-fourth of their branches in unbanked rural areas.
D. At least twenty five per cent of total deposits received by a bank should be invested in central govt securities.
E. All the above
3.What is the consequence of the mandate-driven approach to inclusion?
A. The mandate-driven approach to inclusion results into inclusion of such people as cannot continue their accounts for a longer period.
B. It enhances workload on bank staff, which results into poor service.
C. Such an approach to inclusion defeats the very purpose of financial inclusion.
D. The losses from unused bank accounts are eventually borne by the investors and consumers.
E. None of these
4.Find the correct statement(s) on the basis of the given passage.
A. India’s approach to financial inclusion has focused on the nationalisation of banks.
B. The RBI panel has recently recommended to raise the lending share for weaker sector to forty per cent.
C. India’s financial inclusion means government ownership of banks and their recapitalization.
D. Only (A) and (B)
E. Only (A) and (C)
5.What guidelines have been prepared by the RBI panel on financial inclusion?
(A) Banks be instructed to open accounts for every adult Indian by Jan 2016
(B) Banks be allowed to open satellite branches to provide better services in unbanked rural areas
(C) Priority sector lending by banks be raised
A. Only (A) and (B)
B. Only (B) and (C)
C. Only (A) and (C)
D. Only (A)
E. All (A), (B) and (C)
6.Choose the word/group of words which is MOST SIMILAR in meaning to the word/ group of words printed in bold as used in the passage. Mandate
7.Choose the word/group of words which is most similar in meaning to the word/ group of words printed in bold as used in the passage. Borne
8.Choose the word/group of words which is MOST SIMILAR in meaning to the word/group of words printed in bold as used in the passage. Window
9.Choose the word/group of words which is MOST opposite in meaning to the word/ group of words printed in bold as used in the passage. Overlooked
10.Choose the word/group of words which is most opposite in meaning to the word/ group of words printed in bold as used in the passage. Levied
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